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Investment in Joint Ventures

3 Months Ended

Mar. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

Investment in Joint Ventures (Equity Method)

(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				15,963				116,367
Capital – Third Parties		0				19,392				13,164				17,317				23,944				73,817
Total Liabilities and Capital	$	0				187,509				47,469				59,005				57,092			$	351,075

	As of March 31, 2021
	Brooksville				BC FRP								Amber Ridge				Apartment/				Grand
	Quarry, LLC				Realty, LLC				Hyde Park				Loan				Mixed Use				Total

Investments in real estate, net.	$	14,285				21,943				591				10,197				334,165			$	381,181
Cash and cash equivalents		27				213				0				0				12,585				12,825
Unrealized rents & receivables		0				272				0				0				1,061				1,333
Deferred costs		3				287				0				0				3,264				3,554
Total Assets	$	14,315				22,715				591				10,197				351,075			$	398,893

Secured notes payable	$	0				11,943				0				0				132,890			$	144,833
Other liabilities		20				112				0				0				28,001				28,133
Capital - FRP		7,487				5,330				591				10,197				116,367				139,972
Capital - Third Parties		6,808				5,330				0				0				73,817				85,955
Total Liabilities and Capital	$	14,315				22,715				591				10,197				351,075			$	398,893

The Company’s capital recorded by the unconsolidated Joint Ventures is $3,927,000 less than the Investment in Joint Ventures reported in the Company’s consolidated balance sheet due primarily to capitalized interest.

The Company’s Investments in Joint Ventures as of December 31, 2020 are summarized in the following two tables (in thousands):

	As of December 31, 2020																				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	$	105,737				173,560				45,379				37,452				42,668			$	404,796
Cash and cash equivalents		2,626				111				1,202				14,011				3,554				21,504
Unrealized rents & receivables		13				58				775				2				0				848
Deferred costs		162				85				405				2,810				235				3,697
Total Assets	$	108,538				173,814				47,761				54,275				46,457			$	430,845

Secured notes payable	$	64,982				72,471				29,291				0				1,776			$	168,520
Other liabilities		4,189				22,952				107				1,953				4,774				33,975
Capital - FRP		34,667				58,559				4,894				37,466				15,963				151,549
Capital - Third Parties		4,700				19,832				13,469				14,856				23,944				76,801
Total Liabilities and Capital	$	108,538				173,814				47,761				54,275				46,457			$	430,845

	As of December 31, 2020
	Brooksville				BC FRP								Amber Ridge				Apartment/				Grand
	Quarry, LLC				Realty, LLC				Hyde Park				Loan				Mixed Use				Total

Investments in real estate, net.	$	14,287				22,067				591				10,026				404,796			$	451,767
Cash and cash equivalents		55				90				0				0				21,504				21,649
Unrealized rents & receivables		0				254				0				0				848				1,102
Deferred costs		5				336				0				0				3,697				4,038
Total Assets	$	14,347				22,747				591				10,026				430,845			$	478,556

Secured notes payable	$	0				12,370				0				0				168,520			$	180,890
Other liabilities		28				123				0				0				33,975				34,126
Capital - FRP		7,499				5,127				591				10,026				151,549				174,792
Capital - Third Parties		6,820				5,127				0				0				76,801				88,748
Total Liabilities and Capital	$	14,347				22,747				591				10,026				430,845			$	478,556

The amount of consolidated retained earnings (accumulated deficit) for these joint ventures was $(5,937,000) and $(8,278,000) as of March 31, 2021 and December 31, 2020 respectively.

The income statements of RiverFront Holdings II, LLC are as follows (in thousands):

		RiverFront					RiverFront					RiverFront			RiverFront
		Holdings II, LLC.					Holdings II, LLC.					Holdings II, LLC.			Holdings II, LLC.
		Total JV					Company Share					Total JV			Company Share
Maren		Three Months ended					Three Months ended					Three Months ended			Three Months ended
		March 31,					March 31,					March 31,			March 31,
		2021					2021					2020			2020
Revenues:
Rental Revenue		$	1,836				$	1,469				$	—			$	—
Revenue – other			168					134					2				2
Total Revenues			2,004					1,603					2				2

Cost of operations:
Depreciation and amortization			942					754					—				—
Operating expenses			721					576					236				190
Property taxes			215					172					8				6
Total cost of operations			1,878					1,502					244				196

Total operating profit			126					101					(242	)			(194	)
Interest expense			(886	)				(740	)				—				(197	)

Net loss before tax			(760	)				(639	)				(242	)			(391	)

The income statements of the Bryant Partnerships are as follows (in thousands):

		Bryant Street				Bryant Street
		Partnerships				Partnerships
		Total JV				Company Share
Bryant		Three Months ended				Three Months ended
		March 31,				March 31,
		2021				2021
Revenues:
Rental Revenue		$	17			$	10
Revenue – other			19				12
Total Revenues			36				22

Cost of operations:
Depreciation and amortization			366				225
Operating expenses			507				311
Property taxes			0				0
Total cost of operations			873				536

Total operating profit			(837	)			(514	)
Interest expense			(300	)			(547	)

Net loss before tax			(1,137	)			(1,061	)