Item 1. BUSINESS.
Patriot Transportation Holding, Inc., which was incorporated in
Florida in 1988, and its subsidiaries (the "Company") are engaged
in the transportation and real estate businesses.
Our transportation business is conducted through two wholly owned
subsidiaries, Florida Rock & Tank Lines, Inc. ("Tank Lines"), and
SunBelt Transport, Inc. ("SunBelt"), both of which operate in the
Southeastern United States. Tank Lines hauls petroleum and other
bulk liquids and dry bulk commodities by tank trailers. SunBelt
serves the flatbed portion of the trucking industry, hauling
primarily construction materials.
The Company's real estate activities are conducted through two
wholly owned subsidiaries. Florida Rock Properties, Inc.
("Properties") and FRP Development Corp. ("Development").
Properties owns mining properties and other properties held for
investment or future development. Development owns, manages and
develops commercial warehouse/office rental properties near
Baltimore, Maryland. Substantially all of the real estate
operations are conducted within the Southeastern and Mid-Atlantic
United States.
Revenues from royalties and from a portion of our trucking
operations are subject to factors affecting the level of general
construction activity. In fiscal 2007, our transportation revenues
were adversely affected by the significant decline in residential
construction in our markets.
Transportation. The transportation segment primarily serves
customers in the petroleum and building and construction
industries. Petroleum customers accounted for approximately 68% and
building and construction customers accounted for approximately 32%
of transportation segment revenues during fiscal 2007.
During fiscal 2007, Tank Lines operated from terminals in
Jacksonville, Orlando, Panama City, Pensacola, Tampa and White
Springs, Florida; Albany, Atlanta, Augusta, Bainbridge, Columbus,
Dalton, Macon and Savannah, Georgia; Knoxville, Tennessee;
Montgomery, Alabama; and Wilmington, North Carolina. SunBelt's
flatbed fleet is based in Jacksonville and Tampa, Florida; Atlanta
and Savannah, Georgia; South Pittsburg, Tennessee; Mobile, Alabama;
and Selma, North Carolina.
Tank Lines has from two to six major tank truck competitors in each
of its markets. There are at least ten major competitors in
SunBelt's market area and numerous small competitors in the various
states served. Price, service, and location are the major factors
which affect competition in the transportation segment within a
given market.
During fiscal 2007, the transportation segment's ten largest
customers accounted for approximately 50.7% of the transportation
segment's revenue. One of these customers accounted for 12.3% of
the transportation segment's revenue. The loss of any one of these
customers could have a material adverse effect on the Company's
revenues and income.
During fiscal 2007, the transportation group purchased 63 new
tractors and 4 new trailers. The Company accelerated its normal
tractor replacement cycle in response to stricter engine emission
standards on new trucks that became effective in January 2007. Six
of the tractors purchased in fiscal 2007 have the higher cost
engines required by the new standards. Florida Rock & Tank Lines,
Inc. also purchased 12 used tractors and trailers in July 2007 as
part of the acquisition of another transport company's Atlanta
Georgia business. The acquisition also included the hiring of
drivers and support staff along with assumption of all the
customers. Total additional annual revenue from this acquisition
is estimated to be $2.5 million.
Our fiscal 2008 capital budget includes 63 new tractors and 56 new
trailers which includes binding commitments to purchase 11 tractors
and 20 trailers at September 30, 2007. Maintaining a modern fleet
has resulted in reduced maintenance expenses, improved operating
efficiencies and enhanced driver recruitment and retention. At
September 30, 2007, the Company owned and operated a fleet of 639
tractors and 1,003 trailers.
Real Estate. We own real estate in Florida, Georgia, Virginia,
Maryland, Delaware and Washington, D.C. These properties generally
fall into one of three categories: (i) land and/or buildings leased
under rental agreements or being developed for rental; (ii)
construction aggregates properties, substantially all of which are
leased to Florida Rock Industries, Inc., (iii) land that is being
held for future appreciation or development. Real estate revenues
in fiscal 2007 were divided approximately 70% from rentals on
developed properties and 30% from mining royalties.
A significant part of our real estate strategy has been to develop
high quality, flexible warehouse/office space. Average occupancy
for the fiscal year for buildings in service more than 12 months
was 97.0%. At September 30, 2007, 93.8% of the total
warehouse/office portfolio of approximately 2.5 million square feet
was occupied.
Price, location, rental space availability, flexibility of design,
and property management services are the major factors that affect
competition in the flexible warehouse/office rental market. The
Company experiences considerable competition in all of its markets.
Tenants of flexible warehouse/office properties are not
concentrated in any one particular industry.
Relationship with Florida Rock Industries, Inc. The Company was
spun off from Florida Rock Industries, Inc. ("FRI") in 1988.
Nearly all of our mining properties are leased to FRI under long-
term mining leases entered into in the 1980s. We lease office
space to FRI, and we haul diesel fuel and cement for FRI. We also
are a party to a joint venture agreement with FRI to develop
approximately 4,300 acres of property located near Brooksville,
Florida. We have outsourced some administrative services to FRI.
FRI accounted for approximately 27% of the our real estate revenues
and 1.7% of our transportation revenues for fiscal 2007. On a
consolidated basis, FRI accounted for 5.4% of our fiscal 2007
revenues.
FRI was acquired by Vulcan Materials Company on November 16, 2007.
We do not expect that this event will have a material adverse
effect on our business.
Segment Information. The Company has two business segments:
transportation and real estate. Industry segment information is
presented in Notes 2 and 10 to the consolidated financial
statements included in the accompanying 2007 Annual Report to
Shareholders and is incorporated herein by reference.
Environmental Matters. While the Company is affected by
environmental regulations, such regulations are not expected to
have a major effect on the Company's capital expenditures or
operating results. Starting in January 2007, more stringent engine
emissions standards mandated by the Environmental Protection Agency
became effective for all newly manufactured trucks. The engines
produced under the 2007 standards have a higher cost than the
previous engines. The Company's mining leases contain a provision
making the lessee responsible for reclamation of mining sites at
least to the extent required by law.
Seasonality. The Company's business is subject to limited
seasonality due to the cyclical nature of our customers'
businesses, with revenues generally declining slightly during
winter months.
Employees. The Company employed 990 people in its transportation
group, 24 people in its real estate group and 5 people in its
corporate offices at September 30, 2007.
Company Website. The Company's website may be accessed at
www.patriottrans.com. All of our filings with the Securities and
Exchange Commission can be accessed through our website promptly
after filing. This includes annual reports on Form 10-K, quarterly
reports on Form 10-Q, current reports filed or furnished on Form 8-
K and all related amendments.
EXECUTIVE OFFICERS OF THE REGISTRANT
Name Age Office Position Since
Edward L. Baker 72 Chairman of the Board May 3, 1989
John E. Anderson 62 President & Chief Feb. 17, 1989
Executive Officer
David H.
deVilliers, Jr. 56 Vice President of the Feb. 28, 1994
Company and President
of the Company's Real
Estate Group
Ray M. VanLandingham 64 Vice President, Dec. 6, 2000
Treasurer, Secretary
and Chief Financial
Officer
John D. Klopfenstein 44 Controller and Chief Feb. 16, 2005
Accounting Officer
Terry S. Phipps 43 President of SunBelt April 5, 2004
Transport, Inc.
Robert E. Sandlin 46 President of Florida March 1, 2003
Rock & Tank Lines, Inc.
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All of the above officers have been employed in their respective
positions for the past five years except as follows: John D.
Klopfenstein served as Director, Business Development and Planning
of the Company, from June 2003 to February 2005, and as Manager,
Corporate Development of the Company, from July 1996 to May 2003;
Terry S. Phipps was a Vice President of SunBelt from May 2003 to
April 2004, and was employed with Coastal Transport, Inc. from 1990
to May 2003; and Robert E. Sandlin was a Vice President of Florida
Rock & Tank Lines from 1993 until March 2003.
John D. Baker II, who is the brother of Edward L. Baker, and
Thompson S. Baker II, who is the son of Edward L. Baker, are
directors of the Company.
All executive officers of the Company are elected by the Board of
Directors annually and serve until their resignation or removal.
On December 5, 2007, John E. Anderson, age 62, announced his
retirement as the Company's President and Chief Executive Officer
effective February 6, 2008. Mr. Anderson will continue to serve
on the Company's Board of Directors. On December 5, 2007, the
Company's Board of Directors appointed John D. Baker II to
succeed Mr. Anderson as President and Chief Executive Officer.
Mr. Baker, age 59, has served as a director of the Company since
1986.
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.
Certain shareholders have effective control of nearly a majority of
our common stock and likely will control the outcome of any
shareholder vote.
As of November 30, 2007, three of our directors, Edward L. Baker,
John D. Baker II and Thompson S. Baker II, beneficially own
approximately 46% 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 our business and affairs,
including any determinations with respect to mergers or other
business combinations involving us, our acquisition or disposition
of assets, our borrowing of monies, our issuance of any additional
securities, our repurchase of common stock and our payment of
dividends.
Our charter, bylaws and shareholder rights agreement contain anti-
takeover provisions that may hinder a takeover or negatively affect
our stock price.
Our articles of incorporation, bylaws and shareholder rights
agreement contain several provisions that may make it more
difficult and expensive for a third party to acquire control of us
without the approval of our board of directors. Our articles of
incorporation and bylaws contain provisions dividing our board of
directors into four classes of directors serving four-year terms
and providing that directors may only be removed for cause. Our
articles of incorporation also provide that our shareholders can
take action only at a duly called annual or special meeting of
shareholders and require a supermajority vote to approve certain
matters. In addition, our board of directors is authorized to
issue additional shares of common stock or preferred stock and to
determine the rights and preferences of any shares of preferred
stock to be issued. Our shareholder rights plan is designed to
guard against coercive or unfair tactics to gain control of us.
The rights will cause substantial dilution to any person or group
who attempts to acquire a significant amount of common stock
without approval of our board of directors. Because we can redeem
the rights, the rights will not interfere with a merger or other
business combination approved by our board.
We may be adversely impacted by rising fuels costs and limited
availability of fuel.
The market price for fuel, which recently rose to its highest price
in over a decade, can be extremely volatile and can be affected by
a number of economic and political factors. Rising fuel prices
adversely impact us in two ways. Our transportation business
requires large amounts of diesel fuel to operate our tractors.
Historically, we have been able to recover increases in fuel prices
from customers through fuel surcharges, but our earnings will be
reduced if we are not able to fully offset fuel price increases
with surcharges in the future. In addition, increased fuel prices
often reduce consumer demand for the petroleum products hauled by
our tank lines subsidiary, adversely impacting revenues.
Disruptions in the political climate in key oil producing regions
in the world could limit the availability of fuel in the United
States, increasing our fuel costs and possibly reducing revenues in
our transportation business. Our operations may also be adversely
affected by any limit on the availability of fuel.
Our business may be adversely affected by seasonal factors and
harsh weather conditions.
Our business is subject to seasonal trends common in the refined
petroleum products delivery industry. We typically face increased
demand for fuels delivery services in Florida during the spring
months. Our real estate group and our flatbed trucking subsidiary
are adversely affected by reduced construction activity during
periods of inclement weather. These factors can 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 revenues depend in part on construction sector activity levels,
which tend to be cyclical.
One of our transportation subsidiaries hauls construction
materials. This subsidiary continues to be significantly affected
by the decline in residential construction activity in our market.
Our real estate group receives part of its revenues 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.
We face great difficulty in recruiting and retaining qualified
drivers.
In recent years the transportation industry has had great
difficulty attracting and retaining qualified drivers (including
independent contractors), and competition for drivers is
increasingly intense. To compete for drivers, we may be forced to
increase driver compensation. We cannot be certain that we could
pass along the increased compensation costs to our customers. If
we are unable to continue to attract drivers and contract with
independent contractors, we could be required to suffer downtime
and lost revenue miles.
New tractors are more expensive and less fuel efficient.
New tractors are more expensive, primarily due to higher commodity
prices, better pricing power among equipment manufacturers, and
government regulations applicable to newly manufactured tractors
and diesel engines. Revised EPA regulations decrease the amount of
permitted air emissions that can be released by tractor engines and
affect tractors produced after the effective date of the
regulations. Compliance with these regulations has increased the
cost of our new tractors and lowered fuel mileage. This will
increase our capital expenses and our operating expenses. These
adverse effects combined with the uncertainty as to the reliability
of the vehicles equipped with the newly designed diesel engines and
the residual values that will be realized from the disposition of
these vehicles could increase our costs or otherwise adversely
affect our business or operations.
We have significant ongoing capital requirements.
Our transportation business requires substantial ongoing capital
investment, particularly for tractors, trailers, terminals and
technology. For the past few years, we have depended on cash from
operations and our credit facilities to fund our revenue equipment.
We expect to continue to pay for projected capital expenditures
with cash flows from operations and borrowings under our line of
credit. If we are unable to generate sufficient cash from
operations and obtain financing on favorable terms in the future,
we may have to limit our growth, enter into less favorable
financing arrangements, or operate our revenue equipment for longer
periods, any of which could have a material adverse effect on our
profitability.
The loss of one of our major transportation customers could have a
materially adverse effect on our business.
A significant portion of our transportation revenue is generated
from our major customers. For 2007, our top 10 customers, based on
revenue, accounted for approximately 50.7% of our revenue. A
reduction in or termination of our services by one or more of our
major customers could have a materially adverse effect on our
business and operating results.
The trucking industry is extremely competitive and fragmented.
The trucking industry is extremely competitive and fragmented. No
single truckload carrier has a significant market share. We compete
with many other truckload carriers of varying sizes, customers'
private fleets, and, to a lesser extent, with railroads which may
limit our growth opportunities and reduce profitability. Some of
our competitors periodically reduce their freight rates to gain
business, especially during times of reduced growth rates in the
economy, which may limit our ability to maintain or increase
freight rates or maintain our profit margins. Many customers
reduce the number of carriers they use by selecting so-called "core
carriers" as approved transportation service providers, and in some
instances we may not be selected. Historically, competition has
created downward pressure on the truckload industry's pricing
structure.
Our operations are subject to various environmental laws and
regulations, the violation of which could result in substantial
fines or penalties.
We are subject to various environmental laws and regulations
dealing with the handling of hazardous materials, fuel storage
tanks, air emissions from our vehicles and facilities, and engine
idling. Our operations involve the risks of fuel spillage or
seepage, environmental damage, and hazardous waste disposal, among
others. We also maintain bulk fuel storage and fuel islands at
several of our facilities. Although we have instituted programs to
monitor and control environmental risks and promote compliance with
applicable environmental laws and regulations, the failure to
comply with applicable laws or regulations could subject us to
liabilities, including substantial fines or penalties or civil and
criminal liability, that could have a materially adverse effect on
our business and operating results.
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, cargo and
property damage claims, as well as 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. Also, there are some types
of losses such as from hurricanes, terrorism, wars, or earthquakes
where insurance is limited and/or not economically justifiable. If
an uninsured loss occurs, we could lose both the invested capital
and anticipated revenues. We reserve currently for anticipated
losses and expenses. We periodically evaluate and adjust our
claims reserves to reflect our experience. However, ultimate
results may differ from our estimates, which could result in losses
over our reserved amounts.
Rising insurance costs could significantly reduce our earnings.
Insurance carriers sometimes raise premiums for many businesses,
including trucking companies. As a result, our insurance and claims
expense could increase, or we could raise our self-insured
retention when our policies are renewed. If we are unable to pass
along this cost increase to customers, our earnings may be
significantly reduced.
Compliance with new or future transportation regulations may
significantly reduce earnings.
Our transportation operations are regulated and licensed by various
U.S. agencies. While the costs of compliance with existing
regulations generally is reflected in our prior results, new
regulations (such as the new tractor air emissions regulations) and
future laws and regulations may be more stringent and require
changes in our operating practices, influence the demand for
transportation services, or require us to incur significant
additional costs. Higher costs incurred by us could adversely
affect our results of operations.
We may be unable to renew leases or relet space as leases expire.
When a lease expires, a tenant may elect not to renew it. We may
not be able to relet the property on similar terms. The terms of
renewal or re-lease (including the cost of required renovations
and/or concessions to tenants) may be less favorable than the prior
lease. If we are unable to relet all or a substantial portion of
our properties, or if the rental rates upon such reletting are
significantly lower than expected rates, our cash generated before
debt repayments and capital expenditures may be adversely affected.
As of September 30, 2007, leases at our properties representing
approximately 7% and 19% of the total square footage of our current
portfolio were scheduled to expire in fiscal 2008 and fiscal 2009,
respectively.
The bankruptcy or insolvency of significant tenants with long-term
leases may adversely affect income produced by our properties.
We have ten buildings in our business parks that are single-tenant
occupied representing 48% of developed property rentals under long-
term leases. We have four other tenants with leases in excess of
five years. 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 have to
make expenditures to retrofit and/or divide the space. In addition
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 becomes 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 us. Our claim
against such a tenant for unpaid future rent would be subject to a
statutory limitation that might 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.
A decline in the economic conditions in Baltimore/Washington, D.C.
area could adversely affect Our business.
All of our office/warehouse properties are located in the Baltimore
and Washington, D.C. areas. As a result of our geographic
concentration, we depend upon the local conditions in these
markets, including local real estate conditions. 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 assure you that these markets will continue to
grow or will continue to provide favorable demand for our
office/warehouse product.
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 these 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 and/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. 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.
? A default under a mortgage loan that has cross default
provisions may cause us to automatically default on
another loan.
? 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 be subject to a significant increase in the
variable interest rates on our unsecured line of credit
or unsecured term loan, which could adversely impact our
operations.
As of September 30, 2007, we had outstanding mortgage indebtedness
of $83,934,000, secured by developed real estate properties having
a carrying value of $88,514,000.
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 encumbered 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.
Our real estate segment faces competition from numerous sources.
As a developer of flexible warehouse/office space, we compete with
numerous developers, owners and operators of real estate, many of
which 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 below those 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 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/stoppages and/or rapidly escalating construction costs may
out-pace market rents, adversely affecting profits. The market
environment and existing lease commitments may not allow us to
raise rents to cover these higher costs.
Item 2. PROPERTIES.
The Company's principal properties are located in Florida, Georgia,
Virginia, Washington, D.C., Delaware and Maryland.
Real Estate Segment Properties. Principal properties held by the
Real Estate segment are discussed below under the captions
Developed Properties, Future Planned Development, Construction
Aggregates Properties, and Other Properties.
At September 30, 2007 certain developed real estate properties
having a carrying value of $88,514,000 were pledged on long-term
non-recourse notes with an outstanding principal balance totaling
$83,934,000. In addition, certain other properties having a
carrying value at September 30, 2007 of $98,000 were encumbered by
$1,300,000 of industrial revenue bonds that are the liability of
FRI. FRI has agreed to pay such debt when due (or sooner if FRI
cancels its lease of such property), and further has agreed to
indemnify and hold harmless the Company on account of such debt.
Developed Properties. At September 30, 2007, the Company owned 10
developed parcels of land containing 219 usable acres in the Mid-
Atlantic region of the United States as follows:
1) Hillside Business Park in Anne Arundel County, Maryland consists
of 49 usable acres near the Baltimore-Washington International
Airport. Infrastructure work on the site is substantially
completed and four buildings with a total of 504,740 square feet
are completed that are 92% occupied. Following occupancy by an
additional 22,410 square foot tenant in October 2007 this park is
97% occupied. Construction of the final building with 66,398
square feet of office space was started in October 2007.
2) Lakeside Business Park in Harford County, Maryland consists of
84 usable acres. Eight warehouse/office buildings, totaling 745,741
square feet, have been constructed. Of the eight existing
buildings, seven are 100% leased/occupied and the eighth, completed
in September 2007 is 59% leased. Upon occupancy of the 59% tenant
in November 2007, this park is now 96% occupied. The remaining 27
acres are available for future development and have the potential
to offer an additional 343,000 square feet of comparable product.
3) 6920 Tudsbury Road in Baltimore County, Maryland contains 5.3
acres with 86,100 square feet of warehouse/office space that is
100% leased.
4) 8620 Dorsey Run Road in Howard County, Maryland contains 5.8
acres with 85,100 square feet of warehouse/office space that is
100% leased.
5) Rossville Business Center in Baltimore County, Maryland contains
approximately 10 acres with 190,517 square feet of warehouse/office
space and is 100% leased.
6) 34 Loveton Circle in suburban Baltimore County, Maryland
contains 8.5 acres with 29,921 square feet of office space, which
is 100% leased. The Company occupies 23% of the space and 23% is
leased to FRI.
7) Oregon Business Center in Anne Arundel County, Maryland contains
approximately 17 acres with 195,615 square feet of warehouse/office
space, which is 82% leased.
8) Arundel Business Center in Howard County, Maryland contains
approximately 11 acres with 162,796 square feet of warehouse/office
space, which is 96% leased.
9) 100-400 Interchange Boulevard in New Castle County, Delaware
contains approximately 17 acres with 303,006 square feet of
warehouse/office space, which is 100% leased. The remaining 8.8
acres are available for future development and have the potential
to offer an additional 93,600 square feet of comparable product.
10) 1187 Azalea Garden Road in Norfolk, Virginia contains
approximately 12 acres with 188,093 square feet of warehouse/office
space, which is 100% leased.
Future Planned Developments. At September 30, 2007 the Company
owned the following future development parcels:
1) Windlass Run, formerly referred to as Bird River, located in
southeastern Baltimore County, Maryland, is a 179-acre tract of
land that has direct access to Maryland State Road 43, which was
completed in October 2006 and connects I-95 with Martin State
Airport. This property is currently zoned for residential and
commercial use with 104 developable acres. The Company plans to
develop and lease approximately 515,000 square feet of
warehouse/office buildings on the 42 developable acres zoned for
commercial use. Land development efforts commenced in the summer of
2007. Construction of the first building began in August 2007. The
residential portion of the property was rezoned in September 2007
to allow for additional density and plans are being pursued to
obtain a Planned Unit Development.
2) Patriot Business Park, located in Prince William County,
Virginia, is a 101-acre tract of land which is immediately adjacent
to the Prince William Parkway providing access to I-66. A portion
of the tract totaling 28.7 acres is subject to taking by the
Virginia Department of Transportation for construction of a traffic
cloverleaf at the intersection of Prince William Parkway and Balls
Ford Road. The Company plans to develop and lease approximately
700,000 square feet of warehouse/office buildings on the residual
property. Land development efforts are expected to commence in the
spring of 2008.
3) Brooksville Quarry, LLC. On October 4, 2006, a subsidiary of
the Company (FRP) entered into a Joint Venture Agreement with
Florida Rock Industries, Inc. (FRI) to form Brooksville Quarry,
LLC, a real estate joint venture to develop approximately 4,300
acres of land near Brooksville, Florida. Under the terms of the
joint venture, FRP has contributed its fee interest in
approximately 3,443 acres formerly leased to FRI under a long-
term mining lease which had a net book value of $2,548,000. FRI
is entitled to mine the property until 2018 and pay royalties for
the benefit of FRP for as long as mining does not interfere with
the development of the property. Real estate revenues included
$149,000 of such royalties in fiscal 2007 and $112,000 in fiscal
2006. Allocated depletion expense of $6,000 was included in real
estate cost of operations for fiscal 2007.
FRP also reimbursed FRI $3,018,000 for one-half of the acquisition
costs of a 288-acre contiguous parcel acquired by FRI in 2006 and
contributed by FRI to the joint venture. FRI also contributed 553
acres that it owns as well as its leasehold interest in the 3,443
acres that it leased from FRP. The joint venture is jointly
controlled by FRI and FRP, and they each have a mandatory
obligation to fund additional capital contributions of up to $2
million. Capital contributions of $500,000 were made during fiscal
2007. Distributions will be made on a 50-50 basis except for
royalties and depletion specifically allocated to FRP. Other
income for fiscal 2007 includes a loss of $156,000 representing the
Company's equity in the loss of the joint venture.
The property does not yet have the necessary entitlements for real
estate development. Approval to develop real property in Florida
entails an extensive entitlements process involving multiple and
overlapping regulatory jurisdictions and the outcome is inherently
uncertain. The Company currently expects that the entitlement
process may take several years to complete.
4) Anacostia River. The Company owns a 5.8 acre parcel of
undeveloped real estate in Washington D.C. that fronts the
Anacostia River and is adjacent to the construction site for the
new Washington Nationals Baseball Stadium which is scheduled for
completion in March, 2008. The Company also owns a nearby 2.1 acre
tract on the same bank of the Anacostia River. Currently, these
properties are leased to Florida Rock Industries, Inc., on a month-
to-month basis.
The Company has been pursuing development efforts with respect to
the 5.8-acre parcel for several years. The Company previously
obtained a Planned Unit Development (PUD) Zoning approval for
development of the property and has been working to obtain approval
of a modified PUD that would allow up to 545,800 square feet of
commercial development and up to 569,600 square feet of residential
development. Consideration of a proposed action by the Zoning
Commission is anticipated at a scheduled public meeting in the
first calendar quarter of 2008. The Company remains optimistic
that its zoning application will be approved while at the same time
recognizing that there is inherent uncertainty in any zoning
approval process.
5) Commonwealth Avenue in Jacksonville, Florida is a 50-acre, rail
accessible site near the western beltway of Interstate-295 capable
of supporting approximately 500,000 square feet of eventual
warehouse/office build-out.
Construction Aggregates Properties. The following table summarizes
the Company's principal construction aggregates locations and
estimated reserves at September 30, 2007, substantially all of
which are leased to FRI.
Tons of
Tons Sold Estimated
in Year Reserves
Ended at
9/30/07 9/30/07 Approximate
(000's) (000's) Acres Owned
The Company owns ten
locations currently being
mined in Grandin, Gulf Hammock,
Keuka, Newberry and Airgrove/
Lake County, Florida;
Columbus, Macon, Forest Park
and Tyrone, Georgia;
and Manassas, Virginia. 8,843(1) 437,188 12,994
The Company owns three locations
not currently being mined in
Ft. Myers, Marion County,
Astatula/Lake County - 28,766 2,881
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(1) Tons sold in year ended 9/30/07 include Brooksville tons of
311,000. Tons of estimated reserves and acres owned do not include
Brooksville as the property was transferred October 4, 2006 to a
joint venture with FRI for development.
Other Properties. In addition to the development, mining and rental
sites, the Company owns approximately 2,201 acres of investment and
other real estate. This includes a 1,844-acre timberland site
located in Caroline County, Virginia.
The Company owns an office building with approximately 69,000
square feet situated on approximately 6 acres in Jacksonville,
Florida, which is leased to FRI.
Transportation Segment Properties. The Company has 21 sites for its
trucking terminals in Alabama, Florida, Georgia, North Carolina,
and Tennessee. The Company owns 13 of these sites and leases 8.