FORWARD LOOKING STATEMENTS

Certain portions of this report, and particularly the Management's Discussion and Analysis of Financial Condition and Results of Operations, contain forward-looking statements within the meaning of Sections 27A of the Securities Act of 1933, as amended, and Sections 21E of the Securities Exchange Act of 1934, as amended, which represent the Company's expectations or beliefs concerning future events. The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, including, without limitation, the following: the ability of the Company to generate adequate amounts of cash; the collectability of the excess of straight-line over contractual rents when due over the terms of the long-term leases; tenant default under one or more of the leases; the commencement of additional long-term land leases; changes in economic conditions that may affect either the current or future development on the Company's parcels; the impact of the COVID-19 pandemic on the economy, parking operations, and the Company's financial performance; exposure to remediation costs associated with its former operation of the petroleum storage facility and resolution of the Sprague action against the Company in connection with the construction of the breasting dolphin at the Terminal's Pier. The Company does not undertake the obligation to update forward-looking statements in response to new information, future events or otherwise.



1. Overview:

Critical accounting policies:

The Company believes that its revenue recognition policy for long-term leases with scheduled rent increases meets the definition of a critical accounting policy which is discussed in the Company's Form 10-K for the year ended December 31, 2020. There have been no changes to the application of this accounting policy since December 31, 2020.

2. Liquidity and capital resources:

Historically, the Company has had adequate liquidity to fund its operations.

Cash and cash commitments:

At September 30, 2021, the Company had cash and cash equivalents of $1,818,000. The Company and its subsidiary each maintain checking accounts and a money market account in one bank, all of which are insured by the Federal Deposit Insurance Corporation to a maximum of $250,000. The Company periodically evaluates the financial stability of the financial institutions at which the Company's funds are held.

On July 30, 2020, the Company received notice that the tenant of Parcel 6C exercised its right to terminate the ground lease effective August 29, 2020. On the termination date, the annual rent on Parcel 6C was $220,000 and the annual real estate taxes paid by the tenant equaled $311,000. Upon termination, the real estate taxes became an obligation of the Company effective with the taxes assessed as of December 31, 2020. The Company believes that the assessed value of Parcel 6C as contained in a treaty between the City of Providence ("City") and the tenant is much greater than similar parcels in the Capital Center area. The Company is not a party to the tax treaty. Negotiations with the City to reduce the assessment were unsuccessful. Accordingly, the Company filed a complaint against the Providence Tax Assessor in Rhode Island Superior asserting that the Company is not a party to the Tax Stabilization Agreement and that the assessed value should be determined based on the value of other Parcels in the Capital Center Area. The Company believes that it will prevail and accordingly, is recording real estate taxes based on the assessed value as determined by the firm engaged by the City, Vision Government Solution, Inc. which results in an annual real estate tax of $160,000.

On October 6, 2021 the tenant of Parcel 20 lease was sent a Notice of Lease Termination ("Termination Notice") informing it that the lease would terminate on October 18, 2021 unless the failure to pay the first quarter real estate taxes along with any related penalties and interest was cured. Subsequently, it was agreed that, provided the first and second quarter real estate taxes and any related penalties and interest were paid in full by October 31, 2021, the lease would not be terminated. The tenant did not make the required payments and accordingly, the lease was terminated. On the termination date, the annual amount due from the tenant of Parcel 20 for ground rent and acquisition period rent equaled $195,000 and the annual real estate taxes paid by the tenant equaled $134,000. Upon termination, the real estate taxes became an obligation of the Company.

As of November 9, 2021, all tenants have paid their monthly rent in accordance with their lease agreements except for Metropark. The coronavirus (COVID-19) pandemic has had a significant adverse impact on Metropark. At September 30, 2021 its total rent arrearage is $683,000 and has been fully reserved by the Company. The Company does not know when or


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if Metropark's operations will return to normal. Until parking revenues received by Metropark equal or exceed $70,000 per month whereupon Metropark is obligated to resume regularly scheduled rental payments under its lease, the Company will continue to recognize revenue from Metropark on a cash basis.

For the three and nine months ended September 30, 2021 rent collected from Metropark equaled $42,000 and $65,000 respectively and was $11,000 and $170,000 for the same periods in 2020.

The Company does not expect to receive contingent rent from Metropark in 2021.

The Terminal Sale Agreement and related documentation provides that the Company is required to secure an approved remediation plan and to remediate contamination caused by a leak in 1994 from a storage tank at the Terminal. At September 30, 2021, the Company's accrual for the remaining cost of remediation was $382,000 of which $34,000 is expected to be incurred in the last quarter of 2021. Any subsequent increases or decreases to the expected cost of remediation will be recorded in gain (loss) on sale of discontinued operations, net of taxes.

The Terminal Sale Agreement also contained a cost sharing provision for a breasting dolphin whereby any costs incurred in connection with the construction of the breasting dolphin in excess of the initial estimate of $1,040,000 would be borne equally by Sprague and the Company subject to certain limitations, including, in the Company's opinion, a 20% cap on the increase from the initial estimate subject to the sharing arrangement. In November 2019, the Company received a demand letter from Sprague asserting that it is owed $427,000, which amount represents 50% of the actual costs incurred ($1,894,000) in excess of $1,040,000. The Company asserts that its obligation cannot exceed $104,000. On June 17, 2021 the Company and Sprague met with a mediator to review Sprague's claim. On July 15, 2021, Sprague commenced an action against the Company in the Rhode Island Superior Court seeking monetary damages of $427,000, interest and attorney's fees. The Company intends to vigorously defend against the claims being asserted by Sprague.

The declaration of future dividends will depend on future earnings and financial performance.



3. Results of operations:

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Revenue, leasing increased $312,000 from 2020 due to the termination of the Parcel 20 lease which resulted in the recognition of $283,000 of deferred rental income, scheduled increases in long-term leases ($35,000) and increased cash collections from Metropark ($31,000) offset by the termination of the Parcel 6C lease ($37,000).

Operating expenses increased $113,000 due principally to increased property tax expense due to the termination of the Parcel 6C and Parcel 20 leases ($128,000) offset by other net decreases of $15,000.

General and administrative expense increased $42,000 due principally to increased legal costs associated with the Sprague breasting dolphin matter and the property tax matter associated with Parcel 6C ($31,000) and increases in other various expenses.

For the three and nine months ended September 30, 2021 and 2020, the Company's effective income tax rate is approximately 28% of income before income taxes.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Leasing revenue increased $133,000 from 2020 due to the termination of the Parcel 20 lease ($283,000, a net increase of $72,000 in long-term land leases offset by a net decline in lease revenue from Parcel 6C and Metropark of $147,000 and $78,000, respectively.

Operating expenses increased $200,000 due principally to increased property tax expense due to the tenant's termination of the Parcel 6C lease ($80,000), the Company's termination of the Parcel 20 lease ($101,000) and increases in other various expenses.

General and administrative expenses increased $78,000 due principally to increased legal costs ($105,000) associated with the Sprague breasting dolphin matter and the property tax matter associated with Parcel 6C offset by a decrease in accounting costs ($51,000) related to lease accounting matters along with other net increases of $24,000.


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