Investment in Joint Ventures (Equity Method)

9 Months Ended

Sep. 30, 2018

Equity Method Investments and Joint Ventures [Abstract]

Investment in Joint Ventures (Equity Method)

(11) Investments in Joint Ventures (Equity Method).

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 nine months ended September 30, 2018 includes a loss of $35,000 representing the Company’s portion of the loss of this joint venture.

BC FRP Realty (Windlass Run). During the quarter ending March 2016, we 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 4 buildings through September 15, 2022 from BB&T at 2.5% over LIBOR. The balance outstanding on these loans at September 30, 2018 was $8,374,000.

RiverFront Holdings II, LLC. On May 4, 2018, the Company and MRP formed a Joint Venture to develop Phase II and closed on construction financing with Eagle Bank. The Company has contributed its land with an agreed value of $16.3 million (cost basis of $4.6 million) and $6.2 million of cash. MRP contributed capital of $5.6 million to the joint venture including development costs paid prior to the formation of the joint venture and a $725,000 development fee. The Company further agreed to fund $13.75 million preferred equity financing at 7.5% interest rate of which $690,000 was advanced through September 30, 2018. The loan from Eagle Bank allows draws of up to $71 million during construction at an interest rate of 3.25% over LIBOR. The loan is interest only and matures in 36 months with a 12-month extension assuming completion of construction and at least one occupancy. There is a provision for an additional 72 months extension with a 30-year amortization of principal at 2.15% over seven-year US Treasury Constant if NOI is sufficient for a 9% yield. The Company’s equity interest in the joint venture is accounted for under the equity method of accounting as MRP acts as the administrative agent of the joint venture and oversees and controls the day to day operations of the project.

Investments in Joint Ventures (in thousands):

									The
									Company's
						Total Assets	Net Loss		Share of Net
				Total		of the	of the		Loss of the
	Ownership			Investment		Partnership	Partnership		Partnership
As of September 30, 2018
Brooksville Quarry, LLC	50.00	%			7,477	14,404	(70	)	(35	)
BC FRP Realty, LLC	50.00	%			5,966	20,689	—		—
RiverFront Holdings II, LLC	80.00	%			11,646	20,793	(1	)	(1	)
Total			$		25,089	55,886	(71	)	(36	)
As of December 31, 2017
RiverFront Holdings I, LLC (1)	—		$		—	—	(2,019	)	(1,558	)
Brooksville Quarry, LLC	50.00	%			7,516	14,411	(80	)	(40	)
BC FRP Realty, LLC	50.00	%			5,890	15,027	—		—
Total			$		13,406	29,438	(2,099	)	(1,598	)

(1) The Company consolidated this joint venture effective July 1, 2017 (see Footnote 12).

Income statements for the RiverFront Holdings I, LLC, prior to consolidation July 1, 2017 (in thousands):

	Six Months Ended
	June 30,
	2017
Revenues:
Rental Revenue		3,053
Revenue – Reimbursements		33
Total Revenues		3,086
Cost of operations:
Depreciation and amortization		1,958
Operating expenses		1,096
Property taxes		459
Total cost of operations		3,513
Total operating profit		(427	)
Interest expense		(1,592	)
Net loss of the Partnership		(2,019	)

The amount of consolidated accumulated deficit for these joint ventures was $(2,664,000) and $(2,638,000) as of September 30, 2018 and December 31, 2017 respectively.