FRP HOLDINGS, INC. (FRPH) Risk Factors

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 our Business

Current economic and market conditions, including, but not limited to, elevated interest rates, new and expanded tariffs, a decline in consumer confidence and spending, inflationary conditions that have increased the costs of operating our businesses (including raw materials, products, labor, and freight), widespread supply chain disruptions, has and could continue to adversely impact gross margins, operating margins, and the results of the Company’s operating businesses.

Current economic and market conditions are highly uncertain and volatile as a result of various factors, including elevated interest rates, new and expanded tariffs, a decline in consumer confidence and spending, inflationary conditions, the threat of government shut downs, and supply chain disruptions, which have been exacerbated by the Russian invasion of Ukraine, the fighting in the Middle East, as well as piracy in shipping lanes. We believe these factors have created economic uncertainty which may negatively affect our operating results by, among other things: (i) increasing the cost of raw materials and finished goods such as steel and lumber for our development projects, increasing interest expense on variable rate debt and any new debt, (ii) decreasing gross margins and investment returns due to increased costs of construction and maintenance, (iii) reducing the availability of debt and equity capital for new real estate investments and the number of real estate development projects meeting the Company’s investment criteria and (iv) increasing overall operating expenses due to increases in labor and service costs. These factors also may impact our industrial tenants by increasing their borrowing costs, reducing consumer demand for certain imported products and increasing labor and service costs.

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The Company has experienced significant increases in commodity and labor prices and insurance costs, and such increases may be further impacted by the implementation of additional tariffs on building materials sourced from international markets. In addition, higher interest rates have increased the cost of the Company’s outstanding indebtedness and the costs of financing for new development projects. Higher rates have also had an adverse impact on the availability of financing, and the anticipated profitability of development projects, as capitalization rates related to multifamily apartment communities are generally impacted by interest rates. These factors may have an adverse impact on the Company’s operating results in future periods, particularly if higher development and construction costs continue and debt and equity financing is not available for new projects or is only available on less attractive terms.

Contracted labor is one of the primary components of our expenses. Several factors may adversely affect the labor force available to our contractors or increase their labor costs, including labor shortages, increased competition for qualified employees, and laws and regulations related to minimum wages, including the potential implementation of increases in the statutory minimum salary requirements for employees who are not required to be paid overtime compensation. A sustained labor shortage or increased turnover rates, whether caused by wage inflation or general economic conditions, natural disasters or other factors, could lead to increased costs for future development projects, which could in turn negatively affect our operations or adversely impact our business and results.

In addition, electricity prices have been increasing and are expected to continue to increase due to the rapid expansion of data centers for artificial intelligence.

Investments by the Company in real estate developments directly or through joint ventures expose it to market and economic risks inherent in the real estate construction and development industry.

The real estate construction and development industry is highly competitive and subject to numerous risks which may be beyond management’s control. The success of the Company’s investments in real estate developments is dependent on many factors, including:

•Changes in capitalization rates impacting real estate values;

•Availability and reasonable pricing of labor;

•Availability and reasonable pricing of construction materials, such as steel, lumber, framing, concrete and other building materials, including increases associated with tariffs and supply chain disruptions;

•Changes in laws and regulations for new construction and land entitlements, including environmental and zoning laws and regulations;

•Natural disasters and severe weather conditions increasing costs, delaying construction, causing uninsured losses or reducing demand;

•Availability and cost of insurance;

•Availability of land in desirable locations at prices that result in an economically viable project;

•Delays and costs associated with obtaining permits, approvals or licenses necessary to develop property;

•Availability of property for development at attractive prices;

•Availability and cost of financing;

•Risk of losses resulting from cost overrun guarantees in joint venture projects sponsored by the Company or the failure of such properties to achieve profitability or a profitable exit; and

•Real estate market values and general economic conditions.

Any of these factors could give rise to delays in the start or completion of a project, increase the cost of developing a project, or result in reduced prices and values and significant losses.

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A decline in the economic conditions in our core markets could adversely affect our business.

The majority of our stabilized properties are located in the Baltimore area, Washington, D.C., and Greenville, South Carolina. We are, therefore, subject to increased exposure to (positive or negative) economic factors 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 resulting from factors outside of our control could adversely affect our operation. Such a downturn could be triggered by such factors as the downsizing or relocation of government jobs, crime, acts of terrorism, or natural disasters. 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, may expose us to liability under completion guarantees and impose development management responsibilities on us in certain joint ventures in which we are a minority partner.

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.

Moreover, in certain cases the Company is exposed to potential liability under repayment, construction completion and cost overrun guarantees made by the Company. Also, with our recent acquisition of Altman Logistics, we have assumed development management responsibilities for management projects in which we have a minority interest, which may create additional risks if we fail to perform to the satisfaction of our joint venture partners.

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, excessive rainfall, 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

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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 Phases III and IV of the 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. We have recovered partial reimbursement for these costs from neighboring property owners reducing our basis in the property. 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. Upon development the remediation costs will be capitalized.

The geographic concentration of our properties makes our business more vulnerable to severe weather conditions, natural disasters and climate change.

Climate change presents an array of risks to real estate companies due to sea level rise, flooding, extreme weather, changing weather patterns and ocean currents, stronger storms, human migration, and supply chain disruptions. A significant number of our properties are located in areas that are susceptible to hurricanes, tropical storms, flooding, sea level rise and other natural disasters. We have accounted for the risk of flooding and sea level rise in the design of our Riverfront on the Anacostia development. Future developments, including potential “second life” uses of our mining properties, could be impacted by these factors and the impacts that they have on human behavior. Weather conditions could disrupt the business of our tenants, which may affect the ability of some tenants to pay rent and/or their willingness to remain in or move to affected areas. [Additionally, the cost of insurance associated with our properties has increased, and future weather conditions may cause premiums to increase in the future.]

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Uninsured losses could significantly reduce our earnings.

We self-insure for claims exposure outside of our coverage from property damage, 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 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.

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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, 2025, we had outstanding consolidated indebtedness $193,958,000, secured by developed real estate properties having a carrying value of $276,460,000. Our use of debt may have adverse consequences, including the following:

•Our cash flows from operations may not be sufficient to meet required payments of principal and interest.

•We may be forced to dispose of one or more of our properties, possibly on disadvantageous terms, to make payments on our debt.

•We may default on our debt obligations, and the lenders may foreclose on our properties that collateralize those loans.

•A foreclosure on one of our properties could create taxable income without any accompanying cash proceeds to pay the tax.

•We may not be able to refinance or extend our existing debt.

•The terms of any refinancing or extension may not be as favorable as the terms of our existing debt.

•We may not be able to issue debt on unencumbered properties under reasonable terms to finance growth of our portfolio of properties.

•We may be subject to a significant increase in the variable interest rates on our unsecured and secured lines of credit, which could adversely impact our operations.

•Our debt agreements have yield maintenance requirements that result in a penalty if we prepay loans.

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:

•limits our ability to incur certain additional indebtedness;

•limits our ability to make certain investments;

•limits our ability to merge with another company;

•limits our ability to pay dividends;

•requires us to maintain financial coverage ratios; and

•limits our ability to encumber certain assets except as approved by the lenders.

We 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.

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Unexpected events, such as public health issues, natural disasters, geopolitical conflicts, civil unrest, severe weather and terrorist activities, may disrupt the Company’s operations and increase our costs.

The occurrence of one or more unexpected events, including public health issues, tsunamis, hurricanes, earthquakes, floods and other forms of severe weather or civil unrest, geopolitical conflicts (including the conflict between Ukraine and Russia as well as the conflict in the Middle East) and/or terrorist activities in countries or regions in which our customers, assets, suppliers or our operating businesses are located could adversely affect our operations and financial performance.

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, 2025, our Executive Chairman, John D. Baker II beneficially owned approximately 16.9% of the outstanding shares of our common stock (81% 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 18.2% 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;

•requiring the written demand of 50% of all votes entitled to be cast on a particular issue in order for shareholders to call a special meeting;

•prohibiting shareholders from 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.

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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.

Institutional investor focus on environmental, social and governance issues may impact our stock price.

Many large institutional investors focus on sustainability in managing investment risks, portfolio design and dealing with companies in which they invest. This focus extends to climate change and the plan for transitioning to a net-zero economy, diversity and inclusion and other human resource matters, and social and governance issues and corporate social responsibility. Many of these issues lie at the heart of what the Company considers to be best practices, but a failure to adequately demonstrate our commitment to them might dissuade institutional investors from holding our stock, which would result in downward pressure on our stock price.

The Company’s Bylaws contain an exclusive forum provision, which could impair the ability of shareholders to obtain a favorable judicial forum for certain disputes with the Company or its directors, officers or other employees and be cost-prohibitive to shareholders.

The Company’s Bylaws contain an exclusive forum provision which provides that, unless its Board of Directors consents to the selection of an alternative forum, the Circuit Court located in Duval County, Florida or the federal district court for the Middle District of Florida will be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director or officer or other employee of the corporation to the corporation or the corporation’s shareholders, (iii) any action asserting a claim against the corporation or any director or officer or other employee of the corporation arising pursuant to any provision of the Florida Business Corporation Act or the corporation’s articles of incorporation or bylaws (as either may be amended from time to time), or (iv) any action asserting a claim against the corporation or any director or officer or other employee of the corporation governed by the internal affairs doctrine. Notwithstanding the foregoing, shareholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder. The exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors, officers or other employees or be cost-prohibitive to shareholders, which may discourage such lawsuits against the Company or its directors, officers and other employees. However, there is uncertainty regarding whether a court would enforce the exclusive forum provision. If a court were to find the exclusive forum provision to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect the Company’s financial condition and operating results.