Tom Baker – Chief Executive Officer David deVilliers – President John Milton – Chief Financial Officer

Craig Bibb – CJS Securities Robert Henderson – Rutabaga Capital Management Kevin Bennett – Davenport Asset Management

Good afternoon to you all, as mentioned, I’m Tom Baker, CEO of FRP Holdings and with me today are John Baker, our Chairman; John Milton, our CFO; David deVilliers, our President; and John Klopfenstein, our CAO. Before we get into our results, let me caution you that any statements made during this call that relate to the future are by their nature subject to risk and uncertainties that could cause actual results and events to differ materially from those indicated by such forward-looking statements.

Additional information regarding these and other risk factors and uncertainties may be found in the Company’s filing with the Securities and Exchange Commission. Whether through strategic acquisitions, organic growth, joint ventures, or putting our non-income producing land to work, our constant aim is to create and grow shareholder value.

To that end, we have for some time explored the possibility of converting this company into a Real Estate Investment Trust, with the idea that this may be a more efficient structure given the nature of our business. Though no final decision has been made, in order to have the option to convert to a REIT in 2017, the board has elected to change from our previous fiscal year ending September 30, to a fiscal year that follows the calendar year as is required of a REIT.

This change went into effect January 1, 2017 and will require a one-time additional auditing expense of $120,000, which will be reflected in fiscal 2017. Thus, the transition period ended December 31, 2016 will be known as just that and will not be part of any fiscal year, not even retroactively.

Finally, consistent with having the option to elect REIT status, we have contributed our mining reserves into a wholly owned subsidiary. Because the parent company still retains control of the land itself, the portion of the mining royalties income that is not attributable to the reserves, but instead more closely resembles ground rents, will be retained by the parent company and will qualify as REIT-able income.

The subsidiary will receive only the income attributable to the reserves it now controls. This structure is intended to assure that we will meet the asset and income tests applicable to REITs.

These preliminary steps will not have a material impact on our operations if FRP does not elect REIT status. Revenues for the transition period ended December 31, 2016 was $9.512 million, which is up 7.8% or $689,000 from last fiscal year’s first quarter.

Revenues were up in all three segments of our business. Net income for the transition period was $1.682 million or $0.17 per share versus $7.473 million or $0.76 per share in the same period last year.

Last year’s first quarter benefited from a gain on land sale of $6.286 million, plus income of $3 million from the settlement of environmental claims resulting in a positive impact of $0.57 per share. Now let me turn the call over to David deVilliers to walk us through the results of our three operating segments.

Thank you, Tom and good day to those of you on the call this afternoon. I will now take you through our results for quarter just ended December 31.

As Tom articulated in his opening remarks, we enjoyed another successful quarter in both of our income producing segments and our development segment was busy further preparing certain non-income producing assets for income production. Relative to the asset management segment, rental revenues from our building platform for the quarter just ended increased 5.9% to $7.321 million.

Net operating income increased $300,000 or 5.6% over the same period last year to $5.689 million, due primarily to the acquisition of the Gilroy Road warehouse building in Hunt Valley, Maryland in July of 2016. We ended the this quarter with total occupied square feet of 3,488,995 square feet an increase of 3.7% over last year same quarter or 124,947 square feet.

Our occupancy level stood at 89.9%. As the same-store, the average annual occupancy was up for the quarter by 134,000 square feet or 3.6% to 94.7%.

The corresponding net operating income for the same period increased 2.3% to $5.506 million from $5.383 million. Relative to the mining and royalty segment due to a combination of increased royalty rates in tons sold revenues were up in the quarter just ended from the same period last year by 13.3% or $221,000 to $1.880 million.

These increases resulted in operating profits of $1.708 million, an increase of 16.2% or $238,000 over the same quarter last year. We believe that volume increases from our locations will the norm for the foreseeable future as construction activity in Florida and Georgia continues to improve.

And finally to our Land Development and Construction Segment, as I previously stated this segment is responsible for seeking opportunistic purchases of income producing properties and managing and developing our non-income producing assets into income production. Thus this segment generates minimal revenues but incurs significant costs to accomplish these objectives.

This business segment is the main driver behind our growth. To this end we’ve spent a net $4.205 million and an extensive amount of time during the quarter on capital projects including; one, the ongoing construction of 103,653 square foot building at Patriot Business Center in Manassas, Virginia which is now 82% free leased with the schedule completion of spring of 2017; two, the reconstruction of the bulkhead along the Anacostia River at our 664E property in anticipation of a – future high-rise development similar to our RiverFront project, which is located less than a mile of the river; three, working with our joint venture partner on placing Dock 79 or Phase I of RiverFront in service and the ongoing leasing and marketing strategies; four, pre-development activities for the next phase of RiverFront or Phase II; and five, the conceptual planning for a planned unit development application to the appropriate authorities for our Hampstead property, which was previously rezoned from industrial to residential, in order to maximize the asset’s profitability and expedite its disposition.

So, Phase 1 or Dock 79 began pre-leasing activity in late May of 2016. As of mid-January, the residential units were 50% occupied and 58% leased and four of the five retail suites were 80% leased.

Of note, Phase I results for this quarter produced operating losses and depreciation that resulted in an equity loss in the joint venture of approximately $1,115,000. Last fiscal year, we finalized our joint venture agreement with St.

John Properties Inc. for the development of our remaining acreage at the Windlass Run Business Park.

During the most recent period, the venture has been finalizing the conceptual design that will ultimately provide for a multi-building business park consisting of approximately 329,000 square feet of single-story office building. Land development and ultimately the commencement of the first phase of vertical construction is anticipated to begin in late spring of 2017.

In conclusion, we have some backfilling to do at some of our warehouse locations as a result of the inordinate amount of tenants that have and will be vacating during the year. But like the quarter just ended, we’re hopeful we will prevail.

The velocity of our marketplace has been strong and barring something unforeseen, we believe it will remain so for the foreseeable future. We also have a lot of exciting new projects in the queue and look forward to converting them in to income production.

Thank you, and I’ll now turn it back to Tom.

Thank you David. We remain focused on turning non-income-producing assets into income-producing assets.

And over the last five years, we’ve converted 172 acres of non-income-producing land into 756,000 square feet of income-producing property. In this past quarter, those properties produced $1,267,000 of NOI.

As we fully complete the two spec buildings currently under the final stages of construction, this total will grow even more. As David mentioned, our Royalty business continues to improve and should show solid gains going forward.

Our apartments in DC are running up according to plan as of today, and we’re pushing forward on work for Phase II. As mentioned earlier, we’re setting the groundwork to make a REIT election if we believe that is the best interest of the company and the shareholders.

While we still face the task of leasing a substantial amount of expiring space this year, we’re making progress. And as I’ve said before, we remain excited about the future of FRP.

At this time, we’ll be glad to answer you questions.

Hi. Interesting developments with potential shift to a REIT.

Could you maybe give us the pluses and minuses of becoming a REIT?

Craig, John Milton. I don’t want to go too far end of that because it will be totally up to our Board.

Obviously, at the current tax structure, the REIT converts your tax liabilities to one tax at the shareholder level on the rental income streams we receive. Currently, in order to get that money in the hands of shareholders, it’s subject to a corporate level tax and then a subsequent tax if money is distributed as a dividend.

So, the principal benefit is a net savings in terms of giving money to the shareholders pocket. The downside obviously is the cash requirements to pay out since you have to pay out something akin to your accumulated earnings and profits, which we will not speculate on right now until we have somebody firmly advises on that, so it is a significant cash requirement.

Keep in mind that these items, I call it, will be weighed by our Board in the face of any tax law changes that are implemented by this new administration. And obviously, any changes in the corporate tax rate could be very material to our decision.

Okay. And then, if you’re paying out most of your earnings from the operating assets, would you be comfortable running with a higher level of debt?

Haven’t gone to that point yet, Craig. Obviously, we have very little debt, so I would be comfortable running with more debt than we have today.

Okay. That certainly makes sense.

And then, could you give us just kind of ballpark what portion of mining income would be considered ground rent or what ballpark the dollar value?

Well, we – our analysis right now puts it at just under $2 million but that will change when the minimum rents at Fort Myers start to be actual royalty streams. So that will be a changing number as we go forward in each location.

Okay. And what – is there a timing at Fort Myers that you got to be close?

Well, we should be close on getting the permit – final permit but once the final permit comes it will take them several months to ramp up production.

Okay. And then, the last question from me.

Could you give us the steps to final approval for Phase 2 in Anacostia and kind of the timing it will stops or how it plays out?

David deVilliers, you have that…

Yes, we had our set-down hearing at the end of January and we look forward to hopefully receipt of the final approval some time in February or March.

That’s great.

There’s going to appeal period that runs 60 days and then you’re after the permit drawing, so forth and so on.

Okay. And then at that point, its kind of – is the type of schedules up to you in terms of when you actually want to start and…

That’s correct.

And would you start before you add final lease-up on Phase 1?

There’s a lot of different variables that we have to look at, we haven’t gotten that far.

Craig, the answer to that, that’s probably not but currently we – our progress on lease up has been very good and if it stays at the current level then that will not be an issue.

Were there any surprises with Phase 1, any key learnings or…

Fortunately, I’m going to answer that and say not yet.

Okay, all right thanks a lot guys. Great quarter.

Thank you, Craig.

Good morning or good afternoon I should say. So, just to clarify on the – as you envision the possibility of a REIT now, if that did occur, the income that would go into that REIT would be everything from your income-producing properties and a portion from the mining subsidiary.

Is that correct?

Ever so, generally yes, sir.

Okay. And then you mentioned that you have to weigh the pluses and minuses of the REIT with the two notable things being possible changes in the tax code and also the cash outflow that is required in a REIT and that your Board has to weigh that, are there any other key outstanding things that you have to find out about or way other than those two important questions before you make a decision?

And before we make the decision.

Other issues really are major issues for professionals to audit and determine your exact amount of accumulated earnings and profits to determine the required amount of the dividend.

Okay. All right.

Okay, thank you.

Hi, ladies and gentlemen. I just wonder, and you may have said it already, but just timing for a decision, is that at the next Board meeting or when do you think we could hear something?

You will – this is John Milton, you have technically until the end of the calendar year 2017 but a lot of other things have to happen by that deadline as well. So I would not anticipate that you’d get an answer by the next board meeting.

Okay. And is it a definite that the royalty component of the mining revenue would not be able to go into the REIT or is that something that we’re still studying?

That’s an excellent question and we might ask that at the Interval Revenue Service at an appropriate time. It is their position – the IRS’ position that it does not qualify we may not agree with that position but we will file our tax returns in accordance with the existing law.

And then, I guess just trying to get a rough feel for where our dividend would be based on current income production versus – I think there would be some pretty nice embedded growth, right, with income that we would have associated with projects over the next, say, three to five years. Is there any way to put parameters around that?

Well, that might be for an analyst like yourself but if we do that we don’t make it public.

As you know this company we have never projected earnings and we don’t intend to start now.

And the last thing, will you be comfortable, I would assume, under a REIT’s umbrella that you’d be retaining enough capital to grow as you would like?

That’s one of the issues our Board has to face but we think its possible, yes.

Thank you very much.

Well, thank you so much for your interest and we look forward to talking to you again next quarter.