Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number: 1-10466
The St. Joe Company
(Exact name of registrant as specified in its charter)
Florida
59-0432511
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
130 Richard Jackson Boulevard, Suite 200
Panama City Beach, Florida
32407
(Address of principal executive offices)
(Zip Code)
(850) 231-6400
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Exchange on Which Registered
Common Stock, no par value
JOE
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☑ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☑ NO ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☑
As of April 21, 2025, there were 58,222,315 shares of common stock, no par value, outstanding.
THE ST. JOE COMPANY
INDEX
Page No.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
3
Condensed Consolidated Balance Sheets - March 31, 2025 and December 31, 2024
Condensed Consolidated Statements of Income - Three Months Ended March 31, 2025 and 2024
5
Condensed Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2025 and 2024
6
Condensed Consolidated Statements of Equity - Three Months Ended March 31, 2025 and 2024
7
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2025 and 2024
8
Notes to the Condensed Consolidated Financial Statements
10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
43
Item 3. Quantitative and Qualitative Disclosures About Market Risk
67
Item 4. Controls and Procedures
68
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
69
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
SIGNATURES
70
2
Item 1. Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
March 31,
December 31,
2025
2024
ASSETS
Investment in real estate, net
$
1,047,039
1,040,428
Investment in unconsolidated joint ventures
71,844
66,454
Cash and cash equivalents
94,535
88,756
Other assets
74,666
80,318
Property and equipment, net of accumulated depreciation of $100,035 and $95,339 as of March 31, 2025 and December 31, 2024, respectively
56,188
59,107
Investments held by special purpose entities
203,115
203,511
Total assets
1,547,387
1,538,574
LIABILITIES AND EQUITY
Liabilities:
Debt, net
434,824
437,754
Accounts payable and other liabilities
62,052
53,969
Deferred revenue
60,901
59,274
Deferred tax liabilities, net
71,990
72,358
Senior Notes held by special purpose entity
178,567
178,484
Total liabilities
808,334
801,839
Commitments and contingencies (Note 17)
Equity:
Common stock, no par value; 180,000,000 shares authorized; 58,345,929 and 58,326,521 issued at March 31, 2025 and December 31, 2024, respectively; and 58,222,315 and 58,326,521 outstanding at March 31, 2025 and December 31, 2024, respectively
268,978
268,668
Retained earnings
463,488
454,193
Accumulated other comprehensive income
1,114
1,419
Treasury stock at cost, 123,614 shares held at March 31, 2025
(5,728)
—
Total stockholders’ equity
727,852
724,280
Non-controlling interest
11,201
12,455
Total equity
739,053
736,735
Total liabilities and equity
See accompanying notes to the condensed consolidated financial statements.
The following presents the portion of the condensed consolidated balances attributable to the Company’s consolidated joint ventures (“JV”), which, as of March 31, 2025 and December 31, 2024, include the Pier Park North JV (“Pier Park North JV”), Pier Park Crossings LLC (“Pier Park Crossings JV”), Origins Crossings, LLC (“Watersound Origins Crossings JV”), SJWCSL, LLC (“Watercrest JV”), Pier Park Crossings Phase II LLC (“Pier Park Crossings Phase II JV”), Mexico Beach Crossings, LLC (“Mexico Beach Crossings JV”), Pier Park Resort Hotel, LLC (“Pier Park Resort Hotel JV”), the 30A Greenway Hotel, LLC (“The Lodge 30A JV”), Panama City Timber Finance Company, LLC and Northwest Florida Timber Finance, LLC. As of December 31, 2024, condensed consolidated balances attributable to the Company’s consolidated JVs also include Watersound Closings & Escrow, LLC (“Watersound Closings JV”). See Note 2. Summary of Significant Accounting Policies. Basis of Presentation and Principles of Consolidation and Note 4. Joint Ventures for additional information. The following assets may only be used to settle obligations of the consolidated JVs and the following liabilities are only obligations of the consolidated JVs and do not have recourse to the general credit of the Company, except for covenants and guarantees discussed in Note 8. Debt, Net.
254,311
256,275
4,972
4,458
10,883
14,288
Property and equipment, net
16,118
17,487
489,399
496,019
LIABILITIES
270,866
272,102
6,148
7,401
234
279
455,815
458,266
4
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share amounts)
Three Months Ended
Revenue:
Real estate revenue
38,319
34,188
Hospitality revenue
39,636
39,257
Leasing revenue
16,242
14,342
Total revenue
94,197
87,787
Expenses:
Cost of real estate revenue
18,839
16,033
Cost of hospitality revenue
32,404
30,343
Cost of leasing revenue
7,350
7,175
Corporate and other operating expenses
6,580
7,102
Depreciation, depletion and amortization
12,130
11,182
Total expenses
77,303
71,835
Operating income
16,894
15,952
Other income (expense):
Investment income, net
3,428
3,441
Interest expense
(7,775)
(8,553)
Gain on contributions to unconsolidated joint ventures
14
Equity in income from unconsolidated joint ventures
10,159
7,360
Other expense, net
(230)
(463)
Total other income, net
5,582
1,799
Income before income taxes
22,476
17,751
Income tax expense
(5,808)
(4,649)
Net income
16,668
13,102
Net loss attributable to non-controlling interest
793
813
Net income attributable to the Company
17,461
13,915
NET INCOME PER SHARE ATTRIBUTABLE TO THE COMPANY
Basic
0.30
0.24
Diluted
WEIGHTED AVERAGE SHARES OUTSTANDING
58,244,040
58,320,489
58,257,920
58,341,335
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income:
Other comprehensive (loss) income:
Interest rate swaps
(213)
751
Interest rate swap - unconsolidated joint venture
(2)
93
Reclassification of net realized gain included in earnings
(355)
(485)
Total before income taxes
(570)
359
Income tax benefit (expense)
103
(67)
Total other comprehensive (loss) income, net of tax
(467)
292
Total comprehensive income, net of tax
16,201
13,394
Total comprehensive loss attributable to non-controlling interest
955
719
Total comprehensive income attributable to the Company
17,156
14,113
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Common Stock
Accumulated Other
Outstanding
Retained
Comprehensive
Treasury
Non-controlling
Shares
Amount
Earnings
Income (Loss)
Stock
Interest
Total
Balance at December 31, 2024
58,326,521
Capital distributions to non-controlling interest
(299)
Issuance of restricted stock
19,408
Stock based compensation expense
310
Repurchase of common stock, including excise tax
(123,614)
Dividends ($0.14 per share)
(8,166)
Other comprehensive loss, net of tax
(305)
(162)
Net income (loss)
(793)
Balance at March 31, 2025
58,222,315
Income
Balance at December 31, 2023
58,372,040
270,848
410,371
1,843
15,428
698,490
(239)
Issuance of restricted stock, net of forfeitures
25,466
231
Dividends ($0.12 per share)
(7,006)
Other comprehensive income, net of tax
198
94
(813)
Balance at March 31, 2024
58,397,506
271,079
417,280
2,041
14,470
704,870
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Stock based compensation
(10,159)
(7,360)
Distribution of earnings from unconsolidated joint ventures
7,074
4,148
Deferred income tax
(264)
Cost of real estate sold
17,591
14,829
Expenditures for and acquisition of real estate to be sold
(27,177)
(17,180)
Accretion income and other
(574)
(456)
Amortization of debt issuance costs
232
250
Loss on disposal of property and equipment
46
528
(14)
Gain on insurance for damage to property and equipment, net
(178)
Loss on extinguishment of debt
47
Changes in operating assets and liabilities:
3,832
2,112
1,667
1,866
7,593
3,829
Net cash provided by operating activities
29,016
27,608
Cash flows from investing activities:
Expenditures for operating property
(4,402)
(11,890)
Expenditures for property and equipment
(1,168)
(2,384)
Proceeds from the disposition of assets
59
74
Proceeds from insurance claims
178
Capital contributions to unconsolidated joint ventures
(1,479)
(1,156)
Capital distributions from unconsolidated joint ventures
75
Maturities of assets held by special purpose entities
416
414
Net cash used in investing activities
(6,574)
(14,689)
Cash flows from financing activities:
Repurchase of common stock
(5,685)
Dividends paid
(8,157)
(7,001)
Borrowings on debt
27,832
91
Principal payments for debt
(30,378)
(2,269)
Principal payments for finance leases
(33)
(43)
Debt issuance costs
(384)
Net cash used in financing activities
(17,104)
(9,461)
Net increase in cash, cash equivalents and restricted cash
5,338
3,458
Cash, cash equivalents and restricted cash at beginning of the period
96,316
90,770
Cash, cash equivalents and restricted cash at end of the period
101,654
94,228
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the amounts shown in the condensed consolidated statements of cash flows.
89,768
Restricted cash included in other assets
7,119
4,460
Total cash, cash equivalents and restricted cash shown in the accompanying condensed consolidated statements of cash flows
Restricted cash includes amounts reserved as a requirement of financing, development for certain of the Company’s projects or long-term mitigation bank management.
Cash paid during the period for:
Interest, net of amounts capitalized
9,743
10,428
Federal income taxes, net
4,500
5,000
State income taxes, net
1,150
Non-cash investing and financing activities:
Non-cash contributions to unconsolidated joint ventures
(106)
Increase in Community Development District debt, net
357
Transfers of expenditures for operating property to property and equipment
468
1,173
Increase in expenditures for operating properties and property and equipment financed through accounts payable
1,317
915
Unrealized (loss) gain on cash flow hedges
(215)
9
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, unless otherwise stated)
1. Nature of Operations
The St. Joe Company together with its consolidated subsidiaries (“St. Joe” or the “Company”) is a diversified Florida real estate development, asset management and operating company with all of its real estate assets and operations in Northwest Florida. Approximately 87% of the Company’s real estate is located in Florida’s Bay, Gulf, and Walton counties. Approximately 90% of the Company’s real estate land holdings are located within fifteen miles of the Gulf of Mexico.
The Company conducts primarily all of its business in the following three reportable segments: 1) residential, 2) hospitality and 3) commercial. See Note 16. Segment Information for additional information.
2. Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnotes required by United States generally accepted accounting principles (“GAAP”) for complete financial statements are not included herein. The unaudited interim condensed consolidated financial statements include the accounts of the Company and all of its majority-owned and controlled subsidiaries, voting interest entities where the Company has a majority voting interest or control and variable interest entities where the Company deems itself the primary beneficiary. Investments in JVs in which the Company is not the primary beneficiary, or a voting interest entity where the Company does not have a majority voting interest or control, but has significant influence are unconsolidated and accounted for by the equity method of accounting. All significant intercompany transactions and balances have been eliminated in consolidation. The December 31, 2024 condensed consolidated balance sheet amounts have been derived from the Company’s December 31, 2024 audited consolidated financial statements. Certain prior period amounts in the accompanying condensed consolidated financial statements have been reclassified to conform to the current year presentation. The reclassifications had no effect on the Company’s previously reported total assets and liabilities, equity or net income. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2025.
A variable interest entity (“VIE”) is an entity in which a controlling financial interest may be achieved through arrangements that do not involve voting interests. A VIE is required to be consolidated by its primary beneficiary, which is the entity that possesses the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to the VIE. The Company consolidates VIEs when it is the primary beneficiary of the VIE. The Company continues to evaluate whether it is the primary beneficiary as needed when assessing reconsideration events. See Note 4. Joint Ventures for additional information.
The unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for fair presentation of the information contained herein. The unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The Company adheres to the same accounting policies in preparation of its unaudited interim condensed consolidated financial statements as the Company’s December 31, 2024 annual financial statements, except for any recently adopted accounting pronouncements. As required under GAAP, interim accounting for certain expenses, including income taxes, are based on full year assumptions. For interim financial reporting purposes, income taxes are recorded based upon estimated annual income tax rates.
Concentration of Risks and Uncertainties
All of the Company’s real estate assets are concentrated in Northwest Florida. Uncertain economic conditions could have an adverse impact on the Company’s operations and asset values.
Throughout the first three months of 2025, the Company continued to generate positive financial results. While macroeconomic factors such as tariffs, inflation, elevated interest rates, higher insurance costs, supply chain disruptions, labor shortages, financial institution disruptions and geopolitical conflicts, among other things, continued to produce economic headwinds and impacted buyer sentiment, demand across the Company’s segments remains strong. The Company believes this is primarily due to the continued growth of Northwest Florida as a result of increased migration, which the Company attributes to the region’s high quality of life, natural beauty and outstanding amenities.
Despite the strong demand across the Company’s segments, the Company also continues to feel the impact from the aforementioned macroeconomic factors. In addition, inflation, higher insurance costs and elevated interest rates, have increased operating costs and loan rates, as compared to recent years. While elevated interest rates have negatively impacted buyers’ ability to obtain financing and the housing market generally, the impact has been offset by the net migration into the Company’s markets, limited housing supply relative to demand and the number of cash buyers. Market conditions have not caused an increase in cancellation rates as homebuilders have continued to perform on their contractual obligations with the Company.
The Company’s operations may be affected by seasonal fluctuations. The revenues and earnings from the Company’s business segments may vary significantly from period to period. Homebuilders tend to buy multiple homesites in sporadic transactions. In addition, homesite prices vary significantly by community, which further impacts period over period results. Therefore, there may be reporting periods in which the Company has no, or significantly less, revenue from residential or commercial real estate sales. The Company may also choose to operate rather than lease assets, lease rather than sell assets, or sell improved rather than unimproved land that may delay revenue and profits.
Hospitality revenues are typically higher in the second and third quarters, and vary depending on the timing of holidays and school breaks. Commercial real estate sales tend to be non-recurring. Projects depend on uncertain demand. Extraordinary events such as hurricanes or public health emergencies may dramatically change demand and pricing for products and services.
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, other receivables and investments held by special purpose entity or entities (“SPE”). The Company deposits and invests cash with local, regional and national financial institutions, and as of March 31, 2025, these balances exceeded the amount of F.D.I.C. insurance provided on such deposits. In addition, as of March 31, 2025, the Company had $59.0 million invested in short-term U.S. Treasury Bills and $3.1 million invested in U.S. Treasury Money Market Funds classified as cash and cash equivalents.
Earnings Per Share
Basic earnings per share is calculated by dividing net income attributable to the Company by the basic weighted average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing net income attributable to the Company by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares. The treasury stock method is used to determine the effect on diluted earnings. For the three months ended March 31, 2025 and 2024, the Company had 60,217 and 65,688, respectively, unvested shares of restricted stock. For the three months ended March 31, 2025 and 2024, 46,337 and 44,842, respectively, potentially dilutive restricted stock units were excluded from the calculation of diluted income per share, since the effect would have been anti-dilutive based on the application of the treasury stock method. See Note 13. Stockholders’ Equity for additional information related to the issuance of common stock for employee compensation.
11
The computation of basic and diluted earnings per share are as follows:
Three Months Ended March 31,
Weighted average shares outstanding - basic
Incremental shares from restricted stock
13,880
20,846
Weighted average shares outstanding - diluted
Net income per share attributable to the Company
Basic income per share
Diluted income per share
Recently Adopted Accounting Pronouncements
There have been no recently adopted accounting pronouncements which would have a material effect on the Company’s financial condition, results of operations and cash flows other than those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Recently Issued Accounting Pronouncements
Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”) that requires additional disclosure in the notes to the financial statements information about specific costs and expense categories, including purchases of inventory, employee compensation, depreciation, intangible asset amortization and selling expenses, as well as qualitative descriptions for certain other expenses. This guidance will be effective for annual reporting periods beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027, with early adoption permitted. The guidance should be applied either prospectively for periods after the effective date or retrospectively to all prior periods presented. The Company is currently evaluating the impact that the adoption of this guidance will have on its financial condition, results of operations, cash flows and related disclosures.
12
3. Investment in Real Estate, Net
Investment in real estate, net, excluding unconsolidated JVs, by property type and segment includes the following:
Development property:
Residential
156,904
149,499
Hospitality
12,530
13,342
Commercial
81,454
78,453
Other
4,515
4,234
Total development property
255,403
245,528
Operating property:
10,254
445,479
443,291
485,399
483,643
Total operating property
941,132
937,188
Less: Accumulated depreciation
149,496
142,288
Total operating property, net
791,636
794,900
Investment in real estate, net is carried at cost, net of depreciation and timber depletion, unless circumstances indicate that the carrying value of the assets may not be recoverable.
Development property consists of land the Company is developing or intends to develop for sale, lease or future operations and includes direct costs associated with the land, as well as development, construction and indirect costs. Residential development property includes existing and planned residential homesites and related infrastructure. Hospitality development property consists of land, as well as development costs related to improvements to existing properties and design costs for other hospitality assets. Commercial development property primarily consists of land and construction and development costs for planned commercial, multi-family and industrial uses. Development property in the hospitality and commercial segments will be reclassified as operating property as it is placed into service.
Operating property includes property that the Company uses for operations and activities. Residential operating property consists primarily of residential utility assets and certain rental properties. Hospitality operating property primarily consists of existing hotels, resorts, clubs, vacation rental homes, marinas and other operations. Commercial operating property includes property used for retail, office, self-storage, light industrial, multi-family, senior living, commercial rental and timber purposes. Operating property may be sold in the future as part of the Company’s principal real estate business. As of March 31, 2025 and December 31, 2024, operating property, net related to operating leases was $392.2 million and $395.2 million, respectively.
4. Joint Ventures
The Company enters into JVs, from time to time, for the purpose of developing real estate and other business activities in which the Company may or may not have a controlling financial interest. GAAP requires consolidation of voting interest entities where the Company has a majority voting interest or control and VIEs in which an enterprise has a controlling financial interest and is the primary beneficiary. A controlling financial interest will have both of the following characteristics: (i) the power to direct the VIE activities that most significantly impact economic performance and (ii) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company examines specific criteria and uses judgment when determining whether the Company is the primary beneficiary and must consolidate a VIE. The Company continues to evaluate whether it is the primary beneficiary as needed when assessing reconsideration events. Investments in JVs in which the Company is not the primary beneficiary, or a voting interest entity where the Company does not have a majority voting interest or control, but has significant influence are unconsolidated and accounted for by the equity method of accounting.
13
The timing of cash flows for additional required capital contributions related to the Company’s JVs varies by agreement. Some of the Company’s consolidated and unconsolidated JVs have entered into financing agreements where the Company or its JV partners have provided guarantees. See Note 8. Debt, Net and Note 17. Commitments and Contingencies for additional information. The Company provides mitigation bank credits, impact and other fees, property for lease and services to certain unconsolidated JVs and incurs expense for leasing management services from the Company’s unconsolidated Watersound Management, LLC (“Watersound Management JV”), see Note 18. Related Party Transactions for additional information.
Consolidated Joint Ventures
Mexico Beach Crossings JV
Mexico Beach Crossings JV was formed in 2022, when the Company entered into a JV agreement to develop, manage and lease a 216-unit multi-family community in Mexico Beach, Florida. As of March 31, 2025 and December 31, 2024, the Company owned a 75.0% interest in the consolidated JV. The Company’s unconsolidated Watersound Management JV is responsible for the day-to-day activities of the community. The Company approves all major decisions, including project development, annual budgets and financing. The Company determined Mexico Beach Crossings JV is a voting interest entity as of March 31, 2025 and December 31, 2024.
The Lodge 30A JV
The Lodge 30A JV was formed in 2020, when the Company entered into a JV agreement to develop and operate an 85-room boutique hotel on Scenic County Highway 30A in Seagrove Beach, Florida. As of March 31, 2025 and December 31, 2024, the Company owned a 52.8% interest in the consolidated JV. A wholly-owned subsidiary of the Company manages the day-to-day operations of the hotel. The Company approves all major decisions, including project development, annual budgets and financing. The Company determined The Lodge 30A JV is a VIE and that the Company is the VIE’s primary beneficiary as of March 31, 2025 and December 31, 2024.
Pier Park Resort Hotel JV
Pier Park Resort Hotel JV was formed in 2020, when the Company entered into a JV agreement to develop and operate a 255-room Embassy Suites by Hilton hotel in the Pier Park area of Panama City Beach, Florida. As of March 31, 2025 and December 31, 2024, the Company owned a 70.0% interest in the consolidated JV. A wholly-owned subsidiary of the Company manages the day-to-day operations of the hotel. The Company has significant involvement in the project design and development, annual budgets and financing. The Company determined Pier Park Resort Hotel JV is a VIE and that the Company is the VIE’s primary beneficiary as of March 31, 2025 and December 31, 2024.
Pier Park Crossings Phase II JV
Pier Park Crossings Phase II JV was formed in 2019, when the Company entered into a JV agreement to develop, manage and lease a 120-unit multi-family community in the Pier Park area of Panama City Beach, Florida. As of March 31, 2025 and December 31, 2024, the Company owned a 75.0% interest in the consolidated JV. The Company’s unconsolidated Watersound Management JV is responsible for the day-to-day activities of the community. The Company approves all major decisions, including project development, annual budgets and financing. The Company determined Pier Park Crossings Phase II JV is a VIE and that the Company is the VIE’s primary beneficiary as of March 31, 2025 and December 31, 2024.
Watersound Closings JV
Watersound Closings JV was formed in 2019, when the Company entered into a JV agreement to own, operate and manage a real estate title insurance agency business. In the first quarter of 2025, the Watersound Closings JV ceased operations of its business, distributed final partner equity and transitioned future business to Watersound Title Agency, LLC, a wholly-owned subsidiary of the Company.
Watercrest JV
Watercrest JV was formed in 2019, when the Company entered into a JV agreement to develop and operate a 107-unit senior living community in Santa Rosa Beach, Florida. As of March 31, 2025 and December 31, 2024, the Company owned an 87.0% interest in the consolidated JV. A wholly-owned subsidiary of the Company’s JV partner is responsible for the day-to-day activities of the community. However, the Company approves all major decisions, including project development, annual budgets and financing. The Company determined Watercrest JV is a VIE and that the Company is the VIE’s primary beneficiary as of March 31, 2025 and December 31, 2024.
Watersound Origins Crossings JV
Watersound Origins Crossings JV was formed in 2019, when the Company entered into a JV agreement to develop, manage and lease a 217-unit multi-family community near the entrance to the Watersound Origins residential community. As of March 31, 2025 and December 31, 2024, the Company owned a 75.0% interest in the consolidated JV. The Company’s unconsolidated Watersound Management JV is responsible for the day-to-day activities of the community. The Company approves all major decisions, including project development, annual budgets and financing. The Company determined Watersound Origins Crossings JV is a VIE and that the Company is the VIE’s primary beneficiary as of March 31, 2025 and December 31, 2024.
Pier Park Crossings JV
Pier Park Crossings JV was formed in 2017, when the Company entered into a JV agreement to develop, manage and lease a 240-unit multi-family community in the Pier Park area of Panama City Beach, Florida. As of March 31, 2025 and December 31, 2024, the Company owned a 75.0% interest in the consolidated JV. The Company’s unconsolidated Watersound Management JV is responsible for the day-to-day activities of the community. The Company approves all major decisions, including project development, annual budgets and financing. The Company determined Pier Park Crossings JV is a VIE and that the Company is the VIE’s primary beneficiary as of March 31, 2025 and December 31, 2024.
Pier Park North JV
During 2012, the Company entered into a JV agreement with a partner to develop a retail center at Pier Park North. As of March 31, 2025 and December 31, 2024, the Company owned a 90.0% interest in the consolidated JV. A wholly-owned subsidiary of the Company’s JV partner is responsible for the day-to-day activities of the retail center. The Company approves all major decisions, including project development, annual budgets and financing. The Company determined Pier Park North JV is a VIE and that the Company is the VIE’s primary beneficiary as of March 31, 2025 and December 31, 2024.
15
Unconsolidated Joint Ventures
Investment in unconsolidated joint ventures includes the Company’s investment accounted for using the equity method. The following table presents details of the Company’s investment in unconsolidated joint ventures and total outstanding debt of unconsolidated JVs:
Latitude Margaritaville Watersound JV
59,623
53,399
Watersound Fountains Independent Living JV
4,311
3,857
Pier Park TPS JV (a)
Pier Park RI JV
4,110
5,211
Busy Bee JV
2,469
2,642
Electric Cart Watersound JV
776
781
Watersound Management JV
555
564
Total investment in unconsolidated joint ventures
Outstanding debt principal of unconsolidated JVs
Latitude Margaritaville Watersound JV (b) (c)
25,904
41,246
Watersound Fountains Independent Living JV (c)
42,075
41,683
Pier Park TPS JV (c)
13,069
13,161
24,948
5,280
5,365
Electric Cart Watersound JV (c)
4,796
4,838
Total outstanding debt principal of unconsolidated JVs
116,072
131,241
The Company had approximately $26.3 million in cumulative undistributed earnings from its unconsolidated JVs included within investment in unconsolidated joint ventures as of March 31, 2025. During the three months ended March 31, 2025 and 2024, the Company received distributions from unconsolidated JVs totaling $7.1 million and $4.2 million, respectively. The Company's maximum exposure to loss due to involvement with the unconsolidated JVs as of March 31, 2025 was $120.4 million, which includes the carrying amounts of the investments, guarantees, promissory note receivable, other receivables and derivative instruments. See Note 17. Commitments and Contingencies for additional information related to the promissory note receivable and debt guaranteed by the Company with respect to its involvement with unconsolidated JVs.
16
The following table presents details of the Company’s equity in income (loss) from unconsolidated JVs:
Equity in income (loss) from unconsolidated joint ventures
Latitude Margaritaville Watersound JV (a)
12,700
8,279
Watersound Fountains Independent Living JV (b)
(1,026)
(726)
Pier Park TPS JV
(273)
Pier Park RI JV (c)
(1,100)
Busy Bee JV (d)
(173)
21
Electric Cart Watersound JV (e)
(5)
(25)
36
24
Total equity in income from unconsolidated joint ventures
Summarized balance sheets for the Company’s unconsolidated JVs are as follows:
March 31, 2025
120,780
(a)
50,075
11,872
32,777
8,049
5,091
228,644
45,187
2,100
244
301
725
726
97
49,380
1,054
282
199
2,010
761
25
5,124
167,021
52,968
12,398
33,277
10,784
6,578
122
283,148
25,764
41,885
13,010
24,691
4,735
115,365
40,166
2,758
288
365
549
322
44,448
Equity (deficit)
101,091
8,325
(900)
8,221
4,955
1,521
123,335
17
December 31, 2024
157,336
50,822
12,231
34,576
8,144
5,154
268,263
27,706
405
529
656
104
30,594
2,092
382
428
235
1,921
824
33
5,915
187,134
51,609
12,938
35,340
10,980
6,634
137
304,772
41,054
41,482
24,608
4,775
130,386
59,832
2,794
128
328
63,774
86,248
7,333
(292)
10,422
5,233
1,531
110,612
Summarized statements of operations for the Company’s unconsolidated JVs are as follows:
Three Months Ended March 31, 2025
116,402
741
647
784
2,922
1,073
663
123,232
Cost of revenue
86,202
1,215
664
703
2,919
953
591
93,247
Other operating expenses
4,711
Depreciation and amortization
132
752
360
1,167
134
62
2,607
91,045
1,967
1,024
1,870
3,053
1,015
100,565
Operating income (loss)
25,357
(1,226)
(377)
(1,086)
(131)
58
72
22,667
Other (expense) income:
(687)
(169)
(411)
(34)
(73)
(1,374)
Other income (expense), net
(704)
(112)
(d)
(762)
Total other income (expense), net
(682)
(1,115)
(146)
(2,136)
25,400
(1,908)
(546)
(2,201)
(277)
(9)
20,531
18
Three Months Ended March 31, 2024
90,209
96
768
3,151
925
612
95,761
68,964
737
649
3,074
827
565
74,816
4,586
133
218
906
73,683
1,009
3,207
889
80,308
16,526
(859)
(241)
(56)
15,453
(500)
(189)
(42)
(84)
(815)
Other income, net
32
89
(491)
(185)
(681)
16,558
(1,350)
(426)
(48)
14,772
LMWS, LLC (“Latitude Margaritaville Watersound JV”) was formed in 2019, when the Company entered into a JV agreement to develop a 55+ active adult residential community in Bay County, Florida. As of March 31, 2025, the Latitude Margaritaville Watersound JV had 264 homes under contract and has completed 1,855 home sale transactions of the total estimated 3,500 homes planned in the community. As of March 31, 2025 and December 31, 2024, the Company’s investment in the unconsolidated Latitude Margaritaville Watersound JV was $59.6 million and $53.4 million, respectively, which includes the net present value of the land contribution, cash contributions, additional completed infrastructure improvements and equity in income, less distributions. During the three months ended March 31, 2025 and 2024, the Company received $7.0 million and $4.1 million, respectively, of cash distributions from the JV. As of March 31, 2025, the Company completed $8.4 million of the $9.2 million total agreed upon infrastructure improvements. As of March 31, 2025 and December 31, 2024, the Company owned a 50.0% interest in the JV. The Company’s unimproved land contribution and agreed upon infrastructure improvements are being distributed at an average of $10,000 per home, as each home is sold by the JV.
Per the JV agreement, the Company, as lender, has provided interest-bearing financing in the form of a $10.0 million secured revolving promissory note (the “Latitude JV Note”) to the Latitude Margaritaville Watersound JV, as borrower, to finance the development of the pod-level, non-spine infrastructure. As of both March 31, 2025 and December 31, 2024, there was no balance outstanding on the Latitude JV Note. Future advances, if any, will be repaid by the JV as each home is sold. The day-to-day activities of the JV are being managed through a board of managers, with each JV partner having equal voting rights. The Company has determined that Latitude Margaritaville Watersound JV is a VIE, but that the Company is not the primary beneficiary since it does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company’s investment in the Latitude Margaritaville Watersound JV is accounted for using the equity method. See Note 17. Commitments and Contingencies for additional information related to the revolving promissory note and guaranty by the Company.
WOSL, LLC (“Watersound Fountains Independent Living JV”) was formed in 2021. The Company entered into a JV agreement to develop, construct and manage a 148-unit independent senior living community located near the
19
Watersound Origins residential community. The community opened in March 2024. As of March 31, 2025 and December 31, 2024, the Company owned a 53.8% interest in the JV. The Company’s partner is responsible for the day-to-day activities of the JV. The Company has determined that Watersound Fountains Independent Living JV is a VIE, but that the Company is not the primary beneficiary since it does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company’s investment in Watersound Fountains Independent Living JV is accounted for using the equity method. See Note 17. Commitments and Contingencies for additional information related to debt guaranteed by the Company.
Pier Park TPS, LLC (“Pier Park TPS JV”) was formed in 2018. The Company entered into a JV agreement to develop and operate a 124-room hotel in Panama City Beach, Florida. As of March 31, 2025 and December 31, 2024, the Company owned a 50.0% interest in the JV. The Company’s partner is responsible for the day-to-day activities of the JV. The Company has determined that Pier Park TPS JV is a VIE, but that the Company is not the primary beneficiary since it does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company’s investment in Pier Park TPS JV is accounted for using the equity method. See Note 17. Commitments and Contingencies for additional information related to debt guaranteed by the Company.
Pier Park RI, LLC (“Pier Park RI JV”) was formed in 2022. The Company entered into a JV agreement to develop and operate a 121-room hotel in Panama City Beach, Florida. The hotel opened in April 2024. As of March 31, 2025 and December 31, 2024, the Company owned a 50.0% interest in the JV. The Company’s partner is responsible for the day-to-day activities of the JV. The Company has determined that Pier Park RI JV is a VIE, but that the Company is not the primary beneficiary since it does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company’s investment in Pier Park RI JV is accounted for using the equity method. In 2022, the JV entered into a $25.0 million loan (the “Pier Park RI JV Loan”). The Pier Park RI JV Loan bears interest at the Secured Overnight Financing Rate (“SOFR”) plus 2.5% and matures in August 2025. The Pier Park RI JV Loan includes an option for a fixed rate conversion and two options to extend the maturity date by twenty-four months each, upon satisfaction of certain terms and conditions. The loan is secured by real property and certain other security interests. The Company’s JV partner is the sole guarantor and receives a fee related to the guarantee from the Company based on the Company’s ownership percentage. As of both March 31, 2025 and December 31, 2024, $24.9 million was outstanding on the Pier Park RI JV Loan.
SJBB, LLC (“Busy Bee JV”) was formed in 2019, when the Company entered into a JV agreement to construct, own and manage a Busy Bee branded fuel station and convenience store, which includes a Starbucks, in Panama City Beach, Florida. As of March 31, 2025 and December 31, 2024, the Company owned a 50.0% interest in the JV. The Company’s partner is responsible for the day-to-day activities of the JV. The Company has determined that Busy Bee JV is a VIE, but that the Company is not the primary beneficiary since it does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company’s investment in the Busy Bee JV is accounted for using the equity method. In 2019, the JV, entered into a $5.4 million construction loan (the “Busy Bee JV Construction Loan”) and a $1.2 million equipment loan (the “Busy Bee JV Equipment Loan”). The Busy Bee JV Construction Loan and the Busy Bee JV Equipment Loan bear interest at SOFR plus 1.6%. The Busy Bee JV Construction Loan provides for monthly principal and interest payments with a final balloon payment at maturity in November 2035. The Busy Bee JV Equipment Loan provides for monthly principal and interest payments through maturity in November 2027. The loans are secured by real and personal property and certain other security interests. The Company’s JV partner is the sole guarantor and receives a fee related to the guarantee from the Company based on the Company’s ownership percentage. The Busy Bee JV entered into an interest rate swap to hedge cash flows tied to changes in the underlying floating interest rate tied to SOFR for the Busy Bee JV Construction Loan and the Busy Bee JV Equipment Loan. The Busy Bee JV Construction Loan interest rate swap matures in November 2035 and fixed the variable rate debt, initially at $5.4 million amortizing to $2.8 million at swap maturity, to a rate of 2.7%. The Busy Bee JV Equipment Loan interest rate swap matures in November 2027 and fixed the variable rate debt, initially at $1.2 million to maturity, to a rate of 2.1%. As of both March 31, 2025 and December 31, 2024, $4.8 million was outstanding
20
on the Busy Bee JV Construction Loan. As of both March 31, 2025 and December 31, 2024, $0.5 million was outstanding on the Busy Bee JV Equipment Loan.
SJECC, LLC (“Electric Cart Watersound JV”) was formed in 2022, when the Company entered into a JV agreement to develop, construct, lease, manage and operate a golf cart and low speed vehicle “LSV” business at the new Watersound West Bay Center adjacent to the Latitude Margaritaville Watersound residential community in Bay County, Florida and at the Watersound Town Center near the Watersound Origins residential community. The Watersound Town Center showroom opened in June 2024 on property leased to the JV by the Company. As of March 31, 2025 and December 31, 2024, the Company owned a 51% interest in the JV. The Company’s JV partner manages the day-to-day operations of the business. The Company has determined Electric Cart Watersound JV is a VIE, but that the Company is not the primary beneficiary since it does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company’s investment in Electric Cart Watersound JV is accounted for using the equity method. As of March 31, 2025 and December 31, 2024, the Electric Cart Watersound JV had $2.2 million and $2.4 million, respectively, of floorplan line of credit facilities to finance its golf cart and LSV inventory, which are secured by the JV. Borrowings under the line of credit facility bear interest at various rates based on the number of days outstanding after an interest free period ranging from two to six months. As of both March 31, 2025 and December 31, 2024, the JV had an outstanding principal balance of $0.5 million on these line of credit facilities. See Note 17. Commitments and Contingencies for additional information related to debt guaranteed by the Company.
Watersound Management, LLC was formed in 2021, when the Company entered into a JV agreement to lease, manage and operate multi-family housing developments for which the JV is the exclusive renting and management agent. All activity of Watersound Management JV is related to multi-family housing developments owned by the Company or by consolidated JVs of the Company. As of March 31, 2025 and December 31, 2024, the Company owned a 50.0% interest in the JV. During each of the three months ended March 31, 2025 and 2024, the Company received less than $0.1 million of cash distributions from the JV. The day-to-day activities of the JV are being managed through a board of managers, with each JV partner having equal voting rights. The Company has determined that Watersound Management JV is a voting interest entity, but that the Company does not have a majority voting interest. The Company’s investment in Watersound Management JV is accounted for using the equity method. See Note 18. Related Party Transactions for additional information.
5. Financial Instruments and Fair Value Measurements
Fair Value Measurements
The financial instruments measured at fair value on a recurring basis are as follows:
Total Fair
Level 1
Level 2
Level 3
Value
Cash equivalents:
Money market funds
3,063
U.S. Treasury Bills
58,962
62,025
2,408
58,971
61,379
Money market funds and U.S. Treasury Bills are measured based on quoted market prices in an active market and categorized within Level 1 of the fair value hierarchy. Money market funds and short-term U.S. Treasury Bills with a maturity date of 90 days or less from the date of purchase are classified as cash equivalents in the Company’s condensed consolidated balance sheets.
Assets and liabilities measured at fair value on a recurring basis related to interest rate swap agreements designated as cash flow hedges are as follows:
Fixed
Notional
Fair
Location in
Effective
Maturity
Amount as of
Derivative Asset Fair Value
Consolidated
Description
Date
Rate
Level
Balance Sheets
In Millions
In Thousands
Pier Park Resort Hotel JV Loan (a)
December 2022
April 2027
3.2%
40.5
2,022
2,560
Pier Park TPS JV Loan (b)
January 2021
January 2026
5.2%
13.1
77
108
The following is a summary of the effect of derivative instruments on the Company’s condensed consolidated statements of income and condensed consolidated statements of comprehensive income:
Amount of net (loss) gain recognized in other comprehensive income
844
Amount of net gain reclassified into interest expense
(326)
(438)
Amount of net gain reclassified into equity in income from unconsolidated joint ventures
(29)
(47)
As of March 31, 2025, based on current value, the Company expects to reclassify $1.2 million of derivative instruments from accumulated other comprehensive income to earnings during the next twelve months. See Note 12. Accumulated Other Comprehensive Income for additional information.
Investment in Unconsolidated Joint Ventures
The Company evaluates its investment in unconsolidated JVs for impairment during each reporting period. A series of operating losses of an investee or other factors may indicate that a decrease in the value of the Company’s investment in the unconsolidated JV has occurred. The amount of impairment recognized is the excess of the investment’s carrying value over its estimated fair value. The fair value of the Company’s investment in unconsolidated JVs is determined primarily using a discounted cash flow model to value the underlying net assets or cash flows of the respective JV. The fair value of investment in unconsolidated JVs required to be assessed for impairment is determined using Level 3 inputs in the fair value hierarchy. No impairment for unconsolidated JVs was recorded during the three months ended March 31, 2025 and 2024. See Note 4. Joint Ventures for additional information.
Fair Value of Financial Instruments
The carrying value of the Company’s cash and cash equivalents, restricted cash, receivables, other assets, accounts payable and other liabilities approximate fair value due to the short-term nature of these instruments.
22
The Company uses the following methods and assumptions in estimating fair value for financial instruments:
The carrying amount and estimated fair value, measured on a nonrecurring basis, of the Company’s financial instruments were as follows:
Carrying
Estimated
value
Fair value
Investments held by SPEs:
Time deposit
200,000
2,751
2,715
1
3,143
3,078
Senior Notes held by SPE
180,373
178,473
Debt
Fixed-rate debt
284,510
236,934
258,135
206,775
Variable-rate debt
155,659
184,581
Total debt
440,169
392,593
442,716
391,356
Investments and Senior Notes Held by Special Purpose Entities
In connection with a real estate sale in 2014, the Company received consideration including a $200.0 million fifteen-year installment note (the “Timber Note”) issued by Panama City Timber Finance Company, LLC. The Company contributed the Timber Note and assigned its rights as a beneficiary under a letter of credit to Northwest Florida Timber Finance, LLC. Northwest Florida Timber Finance, LLC monetized the Timber Note by issuing $180.0 million aggregate principal amount of its 4.8% Senior Secured Notes due in 2029 (the “Senior Notes”) at an issue price of 98.5% of face value to third party investors. The investments held by Panama City Timber Finance Company, LLC as of March 31, 2025, consist of a $200.0 million time deposit that, subsequent to April 2, 2014, pays interest at 4.0% and matures in March 2029, U.S. Treasuries of $2.7 million and cash of $0.4 million. The Senior Notes held by Northwest Florida Timber Finance, LLC as of March 31, 2025 consist of $178.6 million, net of the $1.4 million discount and debt issuance costs. Panama City Timber Finance Company, LLC and Northwest Florida Timber Finance, LLC are VIEs, which the Company consolidates as the primary beneficiary of each entity.
6. Leases
The Company as Lessor
Leasing revenue consists of rental revenue from multi-family, senior living, self-storage, retail, office and commercial property, marinas, cell towers and other assets, which is recognized as earned, using the straight-line method over the life of each lease. Variable lease payments primarily include property taxes, insurance, utilities and common area maintenance or payments based on a percentage of sales over specified levels and senior living services. The Company’s leases have remaining lease terms up to the year 2072, some of which include options to terminate or extend.
23
The components of leasing revenue are as follows:
Lease payments
13,671
12,053
Variable lease payments
2,571
2,289
Total leasing revenue
Minimum future base rental revenue on non-cancelable leases subsequent to March 31, 2025, for the years ending December 31 are:
25,725
2026
18,988
2027
16,222
2028
12,860
2029
9,843
Thereafter
38,882
122,520
The Company as Lessee
As of March 31, 2025, the Company leased certain office and other equipment under finance leases and had operating leases for property and equipment used in corporate, hospitality and commercial operations with remaining lease terms up to the year 2081. Operating leases also include property for hospitality employee housing. Certain leases include options to purchase, terminate or renew for one or more years, which are included in the lease term used to establish right-of-use assets and lease liabilities when it is reasonably certain that the option will be exercised. The Company uses its incremental borrowing rate to determine the present value of the lease payments since the rate implicit in each lease is not readily determinable. The Company recognizes short-term (twelve months or less) lease payments in profit or loss on a straight-line basis over the term of the lease and variable lease payments in the period in which the obligation for those payments is incurred.
The components of lease expense are as follows:
Lease cost
Finance lease cost:
Amortization of right-of-use assets
50
41
Interest on lease liability
Operating lease cost
552
197
Variable and short-term lease cost
268
243
Total lease cost
878
486
Other information
Weighted-average remaining lease term - finance lease (in years)
2.3
2.8
Weighted-average remaining lease term - operating leases (in years)
2.6
2.2
Weighted-average discount rate - finance lease
5.5
%
5.3
Weighted-average discount rate - operating leases
5.0
The aggregate payments of finance and operating lease liabilities subsequent to March 31, 2025, for the years ending December 31 are:
Finance Leases
Operating Leases
183
1,638
224
2,098
201
81
55
276
700
4,194
Less imputed interest
(62)
(287)
Total lease liabilities
638
3,907
7. Other Assets
Other assets consist of the following:
Accounts receivable, net
14,076
14,590
Homesite sales receivable
25,245
25,788
Inventory
4,594
4,036
Prepaid expenses
11,024
12,556
Straight-line rent
3,055
2,996
Operating lease right-of-use assets
3,944
4,417
Restricted cash
7,560
4,674
5,437
Accrued interest receivable for Senior Notes held by SPE
935
2,938
Total other assets
Accounts Receivable, Net
The Company’s accounts receivable, net primarily include leasing receivables, membership fees, hospitality receivables and other receivables. Accounts receivable, net had opening balances of $14.6 million and $20.3 million, as of January 1, 2025 and 2024, respectively. As of March 31, 2025 and December 31, 2024, accounts receivable, net includes $7.1 million and $7.5 million, respectively, of club membership initiation fee installments receivable.
At each reporting period, accounts receivable in the scope of Financial Instruments—Credit Losses (Topic 326) are pooled by type and judgements are made based on historical losses and expected credit losses based on economic trends to determine the allowance for credit losses primarily using the aging method. Actual losses could differ from those estimates. Write-offs are recorded when the Company concludes that all or a portion of the receivable is no longer collectible. As of both March 31, 2025 and December 31, 2024, accounts receivable, net were presented net of allowance for credit losses and net of allowance for lease related receivables of $0.3 million. During the three months ended March 31, 2025 and 2024, allowance for credit losses and allowance for leases related to accounts receivable, net decreased $0.1 million and increased $0.1 million, respectively.
Homesite Sales Receivable
Homesite sales receivable from contracts with customers include estimated homesite residuals and certain estimated fees that are recognized as revenue at the time of sale to homebuilders, subject to constraints. Any change in circumstances from the estimated amounts will be updated at each reporting period. The receivable will be collected as the homebuilders build the homes and sell to retail consumers, which can occur over multiple years.
The following table presents the changes in homesite sales receivable:
Balance at beginning of period
29,862
Increases due to revenue recognized for homesites sold
1,646
2,834
Decreases due to amounts received
(2,189)
(2,277)
Balance at end of period
30,419
Prepaid Expenses
Prepaid expenses as of March 31, 2025 and December 31, 2024, include commercial leasing related prepaid expenses of $4.5 million and $4.7 million, respectively, and prepaid insurance of $2.4 million and $4.7 million, respectively, as well as other prepaid items.
Restricted Cash
Restricted cash as of March 31, 2025 and December 31, 2024, includes cash and escrow deposits primarily related to requirements for financing, development for certain of the Company’s projects or long-term mitigation bank management.
Other Assets
Other assets as of March 31, 2025 and December 31, 2024, include $2.0 million and $2.6 million, respectively, for the fair value of derivative assets. See Note 5. Financial Instruments and Fair Value Measurements for additional information.
26
8. Debt, Net
Debt consists of the following:
Effective Rate
Maturity Date
Interest Rate Terms
Watersound Origins Crossings JV Loan (insured by HUD)
April 2058
51,799
51,953
Pier Park Resort Hotel JV Loan
SOFR plus 2.1% (a)
3.9
50,622
50,882
Mexico Beach Crossings JV Loan (insured by HUD)
March 2064
3.0
42,954
43,069
PPN JV Loan
November 2025
4.1
40,084
40,370
PPC JV Loan (insured by HUD)
June 2060
3.1
34,020
34,153
Pearl Hotel Loan
December 2032
6.3
33,670
34,040
North Bay Landing Loan (insured by HUD) (b)
March 2060
5.9
27,800
22,746
Watersound Camp Creek Loan
December 2047
SOFR plus 2.1%, floor 2.6%
6.4
27,243
27,377
PPC II JV Loan (insured by HUD)
May 2057
2.7
21,689
21,796
Hotel Indigo Loan
October 2028
SOFR plus 2.5%, floor 2.5%
6.8
19,649
19,857
Watercrest JV Loan
June 2047
SOFR plus 2.2%
6.5
19,416
19,555
Breakfast Point Hotel Loan
November 2042
Fixed (c)
6.0
15,349
15,473
Lodge 30A JV Loan
January 2028
3.8
13,994
14,130
Topsail Hotel Loan
July 2027
SOFR plus 2.1%, floor 3.0%
12,307
Airport Hotel Loan
February 2030 (d)
11,603
11,717
Watersound Town Center Grocery Loan
August 2031
SOFR plus 2.1%, floor 2.3%
8,048
8,086
Beckrich Building III Loan
August 2029
SOFR plus 1.8%
6.1
5,014
Community Development District debt
May 2025-May 2039
3.6 to 6.0
Beach Homes Loan
May 2029
SOFR plus 1.7%
1,132
1,385
WaterColor Crossings Loan
February 2029
625
1,043
Self-Storage Facility Loan (e)
N/A
3,360
Pier Park Outparcel Loan (e)
1,252
Total principal outstanding
Unamortized discount and debt issuance costs
(5,345)
(4,962)
Total debt, net
The Company’s indebtedness consists of various loans on real and leasehold property. These loans are typically secured by various interests in the property such as assignment of rents, leases, deposits, permits, plans, specifications, fees, agreements, approvals, contracts, licenses, construction contracts, development contracts, service contracts, franchise agreements, the borrower’s assets, improvements, and security interests in the rents, personal property, management agreements, construction agreements, improvements, accounts, profits, leases and fixtures (collectively, “Security Interests”). The specific Security Interests vary from loan to loan. As of March 31, 2025, the weighted average
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effective interest rate of total outstanding debt was 4.8%, of which 73.8% includes fixed or swapped interest rates, and the average remaining life was 18.8 years.
In 2023, the Watersound Origins Crossings JV refinanced into a $52.9 million loan, insured by the U.S. Department of Housing and Urban Development (“HUD”), for a multi-family community located near the entrance to the Watersound Origins residential community (the “Watersound Origins Crossings JV Loan”). The loan provides for monthly payments of principal and interest through maturity in April 2058. The loan includes a prepayment premium due to the lender of 1% - 9% for any principal that is prepaid through April 2033. The loan is secured by the real property and certain other Security Interests.
In 2020, the Pier Park Resort Hotel JV entered into a loan with an initial amount of $52.5 million up to a maximum of $60.0 million through additional earn-out requests (the “Pier Park Resort Hotel JV Loan”). The loan was entered into to finance the construction of a hotel in the Pier Park area of Panama City Beach, Florida. The loan provides for monthly principal and interest payments with a final balloon payment at maturity in April 2027. The loan is secured by the real property and certain other Security Interests. In connection with the loan, as guarantors, the Company and the Company’s JV partner entered into a guarantee based on each partner’s ownership interest in favor of the lender, to guarantee the payment and performance of the borrower. As guarantor, the Company’s liability under the Pier Park Resort Hotel JV Loan can be released upon reaching and maintaining certain debt service coverage. In addition, the guarantee can become full recourse in the case of the failure of the guarantor to abide by or perform any of the covenants or warranties to be performed on the part of such guarantor. The Pier Park Resort Hotel JV entered into an interest rate swap to hedge cash flows tied to changes in the underlying floating interest rate tied to SOFR. The interest rate swap matures in April 2027 and fixed the variable rate on the notional amount of related debt, initially at $42.0 million, amortizing to $38.7 million at swap maturity, to a rate of 3.2%. See Note 5. Financial Instruments and Fair Value Measurements for additional information.
In 2022, the Mexico Beach Crossings JV entered into a $43.5 million loan, insured by HUD, to finance the construction of a multi-family community in Mexico Beach, Florida (the “Mexico Beach Crossings JV Loan”). The loan provides for monthly principal and interest payments through maturity in March 2064. The loan includes a prepayment premium due to the lender of 1% - 9% for any principal that is prepaid through March 2034. The loan is secured by the real property and certain other Security Interests.
In 2015, the Pier Park North JV entered into a $48.2 million loan (the “PPN JV Loan”), secured by a first lien on, and Security Interest in, a majority of the Pier Park North JV’s property. The loan provides for principal and interest payments with a final balloon payment at maturity in November 2025. In connection with the loan, the Company entered into a limited guarantee in favor of the lender, based on its percentage ownership of the JV. In addition, the guarantee can become full recourse in the case of any fraud or intentional misrepresentation by the Pier Park North JV; any voluntary transfer or encumbrance of the property in violation of the due-on-sale clause in the security instrument; upon commencement of voluntary bankruptcy or insolvency proceedings and upon breach of covenants in the security instrument. The Company has begun the process to refinance the PPN JV Loan.
In 2018, the Pier Park Crossings JV entered into a $36.6 million loan, insured by HUD, to finance the construction of a multi-family community in Panama City Beach, Florida (the “PPC JV Loan”). The loan provides for monthly principal and interest payments through maturity in June 2060. The loan includes a prepayment premium due to the lender of 2% - 8% for any additional principal that is prepaid through August 2031. The loan is secured by the real property and certain other Security Interests.
In 2022, a wholly-owned subsidiary of the Company entered into a $37.0 million loan, which is guaranteed by the Company, to finance the acquisition of a hotel located on Scenic Highway 30A (“The Pearl Hotel Loan”). The loan provides for monthly principal and interest payments with a final balloon payment at maturity in December 2032. The loan includes a prepayment fee due to the lender of 1% - 3% of the outstanding principal balance if the loan is refinanced with another financial institution through December 2027. The loan is secured by the real property and certain other Security Interests.
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In 2021, a wholly-owned subsidiary of the Company entered into a loan, as amended, to finance the construction of a multi-family community in Panama City, Florida (the “North Bay Landing Loan”). In February 2025, the North Bay Landing Loan was refinanced, which increased the principal amount of the loan to $27.8 million, fixed the interest rate to 5.9% and provides for monthly payments of principal and interest through maturity in March 2060. The refinanced loan terms include a prepayment premium due to the lender of 1% - 10% for any principal that is prepaid through March 2035. The refinanced loan is insured by HUD and is secured by the real property and certain other Security Interests. During the three months ended March 31, 2025, the Company incurred $0.5 million of loan costs due to the refinance. The three months ended March 31, 2025 includes a less than $0.1 million loss on early extinguishment of debt related to unamortized debt issuance costs, included within other income, net on the condensed consolidated statements of income.
In 2021, a wholly-owned subsidiary of the Company entered into a $28.0 million loan, which is guaranteed by the Company, to finance the construction of an inn and amenity center near the Watersound Camp Creek residential community (the “Watersound Camp Creek Loan”). The loan provides for monthly principal and interest payments through maturity in December 2047. The loan is secured by the real property and certain other Security Interests. As guarantor, the Company’s liability under the loan will be reduced to 50% of the outstanding principal amount upon the project reaching and maintaining a trailing six months of operations with a certain debt service coverage ratio and reduced to 25% of the outstanding principal amount upon reaching and maintaining a trailing twelve months of operations with a certain debt service coverage ratio. In addition, the guarantee can become full recourse in the case of the failure of guarantor to abide by or perform any of the covenants, warranties or other certain obligations to be performed on the part of such guarantor.
In 2019, the Pier Park Crossings Phase II JV entered into a $22.9 million loan, insured by HUD, as amended, to finance the construction of a multi-family community in Panama City Beach, Florida (the “PPC II JV Loan”). The loan provides for monthly payments of principal and interest through maturity in May 2057. The loan includes a prepayment premium due to the lender of 1% - 8% for any additional principal that is prepaid through May 2032. The loan is secured by the real property and certain other Security Interests.
In 2021, a wholly-owned subsidiary of the Company entered into a $21.2 million loan, which is guaranteed by the Company, to finance the construction of a hotel in Panama City, Florida (the “Hotel Indigo Loan”). The loan provides for monthly principal and interest payments with a final balloon payment at maturity in October 2028. The loan includes an option for an extension of the maturity date by sixty months, subject to certain conditions, which would provide for continued principal and interest payments with a final balloon payment at the extended maturity date. The loan is secured by the leasehold property and certain other Security Interests.
In 2019, the Watercrest JV entered into a $22.5 million loan to finance the construction of a senior living facility in Santa Rosa Beach, Florida (the “Watercrest JV Loan”). The loan provides for monthly principal and interest payments through maturity in June 2047. The loan is secured by the real property and certain other Security Interests. In connection with the loan, the Company executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Watercrest JV Loan. The Company is the sole guarantor and receives a quarterly fee related to the guarantee from its JV partner based on the JV partner’s ownership percentage.
In 2020, a wholly-owned subsidiary of the Company entered into a $16.8 million loan, which is guaranteed by the Company, to finance the construction of a hotel in the Breakfast Point area of Panama City Beach, Florida (the “Breakfast Point Hotel Loan”). The loan provides for monthly principal and interest payments through maturity in November 2042. The loan includes a prepayment premium due to the lender of 1% of the outstanding principal balance for any additional principal that is prepaid through November 2027. The loan is secured by the real property and certain other Security Interests.
In 2021, The Lodge 30A JV entered into a $15.0 million loan to finance the construction of a boutique hotel in Seagrove Beach, Florida (the “Lodge 30A JV Loan”). The loan provides for monthly principal and interest payments with a final balloon payment at maturity in January 2028. The loan is secured by the real property and certain other Security Interests. In connection with the loan, the Company, wholly-owned subsidiaries of the Company and the Company’s JV partner entered into a joint and several payment and performance guarantee in favor of the lender. Upon reaching a certain debt service coverage ratio for a minimum of twenty-four months, the Company’s liability as guarantor can be reduced to 75% of the outstanding principal amount for a twelve-month period. The debt service
29
coverage ratio will be tested annually thereafter and the Company’s liability will be reduced to 50% in year four and 25% in year five. The Company receives a monthly fee related to the guarantee from its JV partner based on the JV partner’s ownership percentage.
In 2022, a wholly-owned subsidiary of the Company entered into a $13.7 million loan, which is guaranteed by the Company, to finance the construction of a hotel in Santa Rosa Beach, Florida (the “Topsail Hotel Loan”). The loan provides for interest only payments for the first thirty-six months and principal and interest payments thereafter with a final balloon payment at maturity in July 2027. The loan is secured by the real property and certain other Security Interests.
In 2020, a wholly-owned subsidiary of the Company entered into a $15.3 million loan, which is guaranteed by the Company, to finance construction of a hotel in Panama City, Florida (the “Airport Hotel Loan”). The loan provided for monthly principal and interest payments with a final balloon payment at maturity. In February 2025, the Airport Hotel Loan maturity date was extended from March 2025 to February 2030. During the three months ended March 31, 2025, the Company incurred less than $0.1 million of additional loan costs due to the modification. The loan is secured by the real property and certain other Security Interests.
In 2021, a wholly-owned subsidiary of the Company entered into a $12.0 million loan, which is guaranteed by the Company, to finance the construction of a building in the Watersound Town Center near the Watersound Origins residential community (the “Watersound Town Center Grocery Loan”). The loan provides for monthly principal and interest payments with a final balloon payment at maturity in August 2031. The loan is secured by the real property and certain other Security Interests. As guarantor, the Company’s liability under the loan is 50% of the outstanding principal amount and will be reduced to 25% of the outstanding principal amount upon reaching a certain debt service coverage ratio.
In 2019, a wholly-owned subsidiary of the Company entered into a $5.5 million loan, which is guaranteed by the Company, to finance the construction of an office building in Panama City Beach, Florida (the “Beckrich Building III Loan”). The loan provides for monthly principal and interest payments with a final balloon payment at maturity in August 2029. The loan is secured by the real property and certain other Security Interests.
Community Development District (“CDD”) bonds financed the construction of infrastructure improvements at some of the Company’s projects. The principal and interest payments on the bonds are paid by assessments on the properties benefited by the improvements financed by the bonds. CDD debt is secured by certain real estate or other collateral. The Company has recorded a liability for CDD debt that is associated with platted property, which is the point at which it becomes fixed and determinable. Additionally, the Company has recorded a liability for the portion of the CDD debt that is associated with unplatted property if it is probable and reasonably estimable that the Company will ultimately be responsible for repayment. The Company’s total CDD debt assigned to property it owns was $9.5 million and $9.6 million as of March 31, 2025 and December 31, 2024, respectively. The Company pays interest on this total outstanding CDD debt.
In 2018, a wholly-owned subsidiary of the Company entered into a $1.7 million loan, which is guaranteed by the Company, to finance the construction of two beach homes located in Panama City Beach, Florida (the “Beach Homes Loan”). The loan provides for monthly principal and interest payments with a final balloon payment at maturity in May 2029. The loan is secured by the real property and certain other Security Interests.
In 2018, a wholly-owned subsidiary of the Company entered into a $1.9 million loan, which is guaranteed by the Company, to finance the construction of a commercial leasing property located in Santa Rosa Beach, Florida (the “WaterColor Crossings Loan”). The loan provides for monthly principal and interest payments with a final balloon payment at maturity in February 2029. The loan is secured by the real property and certain other Security Interests.
In 2020, a wholly-owned subsidiary of the Company entered into a $5.8 million loan, to finance the construction of a self-storage facility in Santa Rosa Beach, Florida (the “Self-Storage Facility Loan”). In the first quarter of 2025, the loan was paid in full.
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In 2017, a wholly-owned subsidiary of the Company entered into a $1.6 million loan to finance the construction of a commercial leasing property located in Panama City Beach, Florida (the “Pier Park Outparcel Loan”). In the first quarter of 2025, the loan was paid in full.
The Company’s financing agreements are subject to various customary debt covenants and as of both March 31, 2025 and December 31, 2024, the Company was in compliance with the financial debt covenants.
As of March 31, 2025, property, receivables and inventory that were pledged as collateral related to the Company’s debt agreements, had an approximate carrying amount of $540.0 million. These assets are included within investment in real estate, net, property and equipment, net and other assets on the condensed consolidated balance sheets.
The aggregate maturities of debt subsequent to March 31, 2025, for the years ending December 31 are:
47,346
9,735
69,185
36,963
13,329
263,611
9. Accounts Payable and Other Liabilities
Accounts payable and other liabilities consist of the following:
Accounts payable
25,986
22,847
Income tax payable
2,271
1,849
Finance lease liabilities
406
Operating lease liabilities
4,366
Accrued compensation
5,581
7,635
Other accrued liabilities
7,818
4,982
Club membership deposits
3,155
Advance deposits
11,983
5,879
Accrued interest expense for Senior Notes held by SPE
713
2,850
Total accounts payable and other liabilities
Accounts payable as of March 31, 2025 and December 31, 2024, primarily include payables and retainage related to the Company’s development and construction projects.
Other accrued liabilities include $2.5 million of accrued property taxes as of March 31, 2025, which are generally paid annually in November. As of December 31, 2024, the Company had no accrued property taxes.
Advance deposits consist of deposits received on hotel rooms and related hospitality activities. Advance deposits are recorded as accounts payable and other liabilities in the condensed consolidated balance sheets without regard to whether they are refundable and are recognized as income at the time the service is provided for the related deposit.
10. Deferred Revenue
As of March 31, 2025 and December 31, 2024, deferred revenue includes club initiation fees of $45.6 million and $45.9 million, respectively, and other deferred revenue of $15.3 million and $13.4 million, respectively.
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Club initiation fees are recognized as revenue over the estimated average duration of membership, which is evaluated periodically. The following table presents the changes in club initiation fees related to contracts with customers:
45,885
48,742
New club memberships
3,243
5,022
Revenue from amounts included in contract liability opening balance
(3,493)
(3,105)
Revenue from current period new memberships
(82)
(262)
45,553
50,397
Remaining performance obligations represent contracted revenue that has not been recognized related to club initiation fees. As of March 31, 2025, remaining performance obligations were $45.6 million, of which the Company expects to recognize as revenue $9.1 million in 2025, $21.7 million in 2026 through 2027, $13.5 million in 2028 through 2029 and $1.3 million thereafter.
Other deferred revenue as of both March 31, 2025 and December 31, 2024, includes $10.9 million related to a 2006 agreement pursuant to which the Company agreed to sell land to the Florida Department of Transportation. Revenue is recognized when title to a specific parcel is legally transferred.
11. Income Taxes
Income tax expense (benefit) attributable to income from operations differed from the amount computed by applying the statutory federal income tax rate of 21% as of March 31, 2025 and 2024 to pre-tax income as a result of the following:
U.S. federal statutory tax rate
4,720
21.0
3,898
State and local income taxes, net of federal income tax effect (a)
991
4.4
Energy related tax credits
(0.3)
Nontaxable or nondeductible and other items
0.4
(0.1)
Total income tax expense
5,808
25.8
4,649
25.0
As of March 31, 2025 and December 31, 2024, the Company had income tax payable of $2.3 million and $1.8 million, respectively, included within accounts payable and other liabilities on the condensed consolidated balance sheets.
In general, a valuation allowance is recorded if, based on all available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization of the Company’s deferred tax assets is dependent upon the Company generating sufficient taxable income in future years in the appropriate tax jurisdictions to obtain a benefit from the reversal of deductible temporary differences and from loss carryforwards. As of both March 31, 2025 and December 31, 2024, the Company did not have a valuation allowance.
Significant judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. The Company regularly assesses the likelihood of adverse outcomes resulting from potential examinations to determine the adequacy of its provision for income taxes and applies a “more-likely-than-not” in determining the financial statement recognition and measurement of a tax position taken or expected to be taken in the tax returns. The Company has not identified any material unrecognized tax benefits as of March 31, 2025 or December 31, 2024.
12. Accumulated Other Comprehensive Income
Following is a summary of the changes in the balances of accumulated other comprehensive income, which is presented net of tax:
Unrealized
Gain (Loss) on
Cash Flow
Hedges
Accumulated other comprehensive income as of December 31, 2024
Other comprehensive loss before reclassifications
(177)
Amounts reclassified from accumulated other comprehensive income
(290)
Other comprehensive loss
Less: Other comprehensive loss attributable to non-controlling interest
162
Accumulated other comprehensive income as of March 31, 2025
Following is a summary of the tax effects allocated to other comprehensive (loss) income:
Before-
Tax
Net-of-
Tax Amount
Benefit
38
(175)
Reclassification adjustment for net (gain) loss included in earnings
65
Net unrealized (loss) gain
Other comprehensive (loss) income
Tax (Expense)
(133)
618
(24)
90
(395)
Net unrealized gain (loss)
Other comprehensive income (loss)
13. Stockholders’ Equity
Dividends
During the three months ended March 31, 2025 and 2024, the Company paid dividends of $0.14 and $0.12, respectively, per share on the Company’s common stock for a total of $8.2 million and $7.0 million, respectively.
Stock Repurchase Program
The Company’s Board of Directors (the “Board”) approved a stock repurchase program (the “Stock Repurchase Program”) pursuant to which the Company is authorized to repurchase shares of its common stock. The program has no expiration date.
During the three months ended March 31, 2025, the Company repurchased 123,614 shares of its common stock outstanding at an average repurchase price of $45.99, per share, for an aggregate purchase price of $5.7 million, excluding the excise tax on stock repurchases in excess of issuances as a result of the Inflation Reduction Act of 2022 (the “IRA”). During the three months ended March 31, 2024, the Company did not repurchase shares of its common stock outstanding. As of March 31, 2025, the Company had a total authority of $94.3 million available for purchase of
shares of its common stock. The Company may repurchase its common stock in open market purchases from time to time, in privately negotiated transactions or otherwise, pursuant to Rule 10b-18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The timing and amount of any additional stock to be repurchased will depend upon a variety of factors. Repurchases may be commenced or suspended at any time or from time to time without prior notice. The Stock Repurchase Program will continue until otherwise modified or terminated by the Company’s Board at any time in its sole discretion.
Issuance of Common Stock for Employee Compensation
In February 2025, the Company granted 16,076 restricted stock awards to certain employees pursuant to the Company’s 2015 Performance and Equity Incentive Plan (the “2015 Plan”). The restricted stock awards vest in equal annual installments on the first, second and third annual anniversary of the grant date, subject to the recipient’s continued employment through and on the applicable vesting date. In addition, in February 2025, the Company granted 3,332 restricted stock awards to an employee pursuant to the 2015 Plan. The restricted stock awards vest in January 2030, subject to the recipient’s continued employment through and on the applicable vesting date. The weighted average grant date fair value of the restricted stock awards was $46.24 per share.
In February 2024, the Company granted 26,744 restricted stock awards to certain employees pursuant to the 2015 Plan. The restricted stock awards vest in equal annual installments on the first, second and third annual anniversary of the grant date, subject to the recipient’s continued employment through and on the applicable vesting date. During the three months ended March 31, 2025, 8,051 of the restricted shares vested on the first annual anniversary. During the three months ended March 31, 2024, 2,592 of the unvested restricted shares were forfeited due to the recipient’s resignation. In addition, in February 2024, the Company granted 5,418 restricted stock awards to an employee pursuant to the 2015 Plan. The restricted stock awards vest in January 2030, subject to the recipient’s continued employment through and on the applicable vesting date. The weighted average grant date fair value of the restricted stock awards was $54.16 per share.
In March 2023, the Company granted 12,796 restricted stock awards to certain employees pursuant to the 2015 Plan. The restricted stock awards vest in equal annual installments on the first, second and third annual anniversary of the grant date, subject to the recipient’s continued employment through and on the applicable vesting date. During the three months ended March 31, 2025 and 2024, 3,185 and 3,187, respectively, of the restricted shares vested on the annual anniversaries. During the three months ended March 31, 2024, 3,237 of the unvested restricted shares were forfeited due to the recipient’s resignation. The weighted average grant date fair value of the restricted stock awards was $39.42 per share.
In February 2023, the Company granted 17,943 restricted stock awards to certain employees pursuant to the 2015 Plan. The restricted stock awards vest in equal annual installments on the first, second and third annual anniversary of the grant date, subject to the recipient’s continued employment through and on the applicable vesting date. During the three months ended March 31, 2025 and 2024, 5,979 and 5,982, respectively, of the restricted shares vested on the annual anniversaries. In addition, in February 2023, the Company granted 5,760 restricted stock awards to an employee pursuant to the 2015 Plan. The restricted stock awards vest in January 2030, subject to the recipient’s continued employment through and on the applicable vesting date. The weighted average grant date fair value of the restricted stock awards was $44.30 per share.
In April 2022, the Company granted 4,361 restricted stock awards to an employee pursuant to the 2015 Plan. The restricted stock awards vest in January 2030, subject to the recipient’s continued employment through and on the applicable vesting date. The weighted average grant date fair value of the restricted stock awards was $55.73 per share.
In February 2022, the Company granted 25,594 restricted stock awards to certain employees pursuant to the 2015 Plan. The restricted stock awards vested in equal annual installments on the first, second and third annual anniversary of the grant date, subject to the recipient’s continued employment through and on the applicable vesting date. During the three months ended March 31, 2025 and 2024, 7,664 and 8,532, respectively, of the restricted shares vested on the annual anniversaries. During the three months ended March 31, 2024, 867 of the unvested restricted shares were
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forfeited due to the recipient’s resignation. The weighted average grant date fair value of the restricted stock awards was $46.73 per share.
Following is a summary of non-vested restricted share activity:
Weighted Average
Grant Date
Number of
Fair Value
Non-Vested Restricted Shares
Per Share
65,688
49.31
57,923
44.80
Granted
46.24
32,162
54.16
Vested
(24,879)
47.61
(17,701)
44.59
Forfeited
(6,696)
46.07
60,217
49.02
Stock based compensation cost is measured at the grant date based on the fair value of the award and is typically recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. Forfeitures are accounted for as they occur. During the three months ended March 31, 2025 and 2024, the Company recorded expense of $0.3 million and $0.2 million, respectively, related to restricted stock awards for employee compensation.
As of March 31, 2025 and December 31, 2024, unrecognized compensation costs, related to non-vested restricted stock awards were $2.6 million and $2.0 million, respectively. As of March 31, 2025, unrecognized compensation costs will be recognized over a weighted average period of 2.8 years.
14. Revenue Recognition
Revenue consists primarily of real estate sales, hospitality operations and leasing operations. Taxes collected from customers and remitted to governmental authorities (e.g., sales tax) are excluded from revenue, cost of revenue and expenses. The following represents revenue disaggregated by segment, good or service and timing:
Revenue by Major Good/Service:
32,906
4,392
1,021
79
914
15,105
144
32,985
40,550
19,497
1,165
Timing of Revenue Recognition:
Recognized at a point in time
26,112
64,431
Recognized over time
13,524
Over lease term
35
30,758
2,627
803
56
13,482
30,814
40,033
16,109
831
26,392
60,580
12,865
15. Other Income, Net
Other income, net consists of the following:
Interest, dividend and accretion income
671
840
Interest income from investments in SPEs
2,003
Interest earned on notes receivable and other interest
754
598
Total investment income, net
Interest incurred for project financing and other interest expense
(5,555)
(6,337)
Interest expense and amortization of discount and issuance costs for Senior Notes issued by SPE
(2,220)
(2,216)
Total interest expense
Miscellaneous expense, net
Investment Income, Net
Interest, dividend and accretion income includes interest income accrued or received on the Company’s cash, cash equivalents and other investments.
Interest income from investments in SPEs primarily includes interest earned on the investments held by Panama City Timber Finance Company, LLC, which is used to pay the interest expense for Senior Notes held by Northwest Florida Timber Finance, LLC. See Note 5. Financial Instruments and Fair Value Measurements for additional information.
Interest earned on the Company’s notes receivable and other interest includes interest earned on notes receivable and on the Company’s unimproved land contribution to the unconsolidated Latitude Margaritaville Watersound JV as home sales are transacted in the community. See Note 4. Joint Ventures for additional information.
Interest Expense
Interest expense includes interest incurred related to the Company’s project financing, Senior Notes issued by Northwest Florida Timber Finance, LLC, CDD debt and finance leases. Interest expense also includes amortization of debt discount and premium and debt issuance costs. Discount and issuance costs for the Senior Notes issued by Northwest Florida Timber Finance, LLC, are amortized based on the effective interest method at an effective rate of 4.9%. See Note 5. Financial Instruments and Fair Value Measurements for additional information.
During the three months ended March 31, 2025 and 2024, the Company did not capitalize interest related to projects under development or construction.
Gain on Contributions to Unconsolidated Joint Ventures
Gain on contributions to unconsolidated joint ventures for each the three months ended March 31, 2025 and 2024, include a gain of less than $0.1 million on additional infrastructure improvements contributed to the Company’s unconsolidated Latitude Margaritaville Watersound JV. See Note 4. Joint Ventures for additional information.
Equity in Income from Unconsolidated Joint Ventures
Equity in income from unconsolidated joint ventures includes the Company’s proportionate share of earnings or losses of unconsolidated JVs accounted for using the equity method. Equity in income from unconsolidated joint ventures includes income related to the Latitude Margaritaville Watersound JV of $12.7 million and $8.3 million during the three months ended March 31, 2025 and 2024, respectively. Equity in income from unconsolidated joint ventures also includes loss related to the Pier Park RI JV of $1.1 million during the three months ended March 31, 2025. The hotel opened in April 2024. Activity primarily includes start-up, depreciation and interest expenses for the project. Equity in income from unconsolidated joint ventures also includes loss related to the Watersound Fountains Independent Living JV of $1.0 million and $0.7 million during the three months ended March 31, 2025 and 2024, respectively. The community opened in March 2024 and is currently under lease-up. See Note 4. Joint Ventures for additional information.
Other Expense, Net
Other expense, net primarily includes other income and expense items. Miscellaneous expense, net during the three months ended March 31, 2024, includes $0.5 million net loss on disposal of assets.
16. Segment Information
The Company conducts primarily all of its business in the following three reportable segments: (1) residential, (2) hospitality and (3) commercial. The Company’s reportable segments are strategic business units that offer different products and services. They are each managed separately and decisions about allocations of resources are determined by management based on these strategic business units.
The accounting policies of the segments are set forth in Note 2 to the Company’s consolidated financial statements contained in Item 15 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. Total revenue represents sales to unaffiliated customers, as reported in the Company’s condensed consolidated statements of income. All significant intercompany transactions have been eliminated in consolidation. The Company uses total segment revenue, gross profit and income before income taxes and non-controlling interest and other qualitative measures for purposes of making decisions about allocating resources to each segment and assessing each segment’s performance, which the Company believes represents current performance measures.
The Company’s President, Chief Executive Officer and Chairman of the Board is the Chief Operating Decision maker (the “CODM”). For the residential, hospitality and commercial segments, the CODM uses segment revenue, gross profit and income before income taxes and non-controlling interest to allocate resources (including employees, property, and financial or capital resources) for each segment predominantly in the annual budget and forecasting process. The CODM considers budget-to-actual variances on a monthly basis for the profit measures when making decisions about
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allocating capital and personnel to the segments. The CODM also uses segment revenue and gross profit for evaluating product pricing and segment income before income taxes and non-controlling interest to assess the performance for each segment by comparing the results and return on assets of each segment with one another and in the compensation of certain employees.
The Company does not allocate income taxes or certain unusual items to segments. In addition, the hospitality and commercial segments have significant noncash depreciation and amortization in reported profit or loss.
The captions entitled “Other” consists of mitigation credit, title and insurance business revenue and cost of revenue; corporate operating expenses; corporate depreciation and amortization and corporate other income and expense items.
Information by business segment is as follows:
Operating revenue:
Consolidated operating revenue
Cost of revenue:
Cost of residential revenue
17,965
15,026
32,889
30,946
Cost of commercial revenue
7,034
6,999
Cost of other revenue
705
580
Consolidated cost of revenue
58,593
53,551
Gross profit:
15,020
15,788
7,661
9,087
12,463
9,110
460
251
Consolidated gross profit
35,604
34,236
Corporate and other operating expenses:
1,204
1,089
436
421
1,119
1,183
3,821
4,409
Consolidated corporate and other operating expenses
Depreciation, depletion and amortization:
7,161
6,587
4,813
4,431
98
102
Consolidated depreciation, depletion and amortization
Investment income, net:
534
420
40
Other (a)
2,799
2,968
Consolidated investment income, net
Interest expense:
100
2,660
3,018
2,803
3,219
Other (b)
2,222
2,216
Consolidated interest expense
7,775
8,553
Gain on contributions to unconsolidated joint ventures:
Consolidated gain on contributions to unconsolidated joint ventures
Equity in income (loss) from unconsolidated joint ventures:
Residential (c)
Commercial (d)
(2,541)
(919)
Consolidated equity in income from unconsolidated joint ventures
Other income (expense), net:
105
71
(91)
(380)
(271)
(207)
53
Income (loss) before income taxes:
27,007
23,321
(2,657)
(1,279)
981
(836)
Other (a) (b)
(2,855)
(3,455)
Consolidated income before income taxes
Capital expenditures:
25,133
15,297
2,774
8,451
4,550
7,298
290
408
Total capital expenditures
32,747
31,454
39
Investment in unconsolidated joint ventures:
12,221
13,055
Total assets:
255,090
241,435
457,033
460,604
514,730
515,955
320,534
320,580
17. Commitments and Contingencies
The Company establishes an accrued liability when it is both probable that a material loss has been incurred and the amount of the loss can be reasonably estimated. The Company will evaluate the range of reasonably estimated losses and record an accrued liability based on what it believes to be the minimum amount in the range, unless it believes an amount within the range is a better estimate than any other amount. In such cases, there may be an exposure to loss in excess of the amounts accrued. The Company evaluates quarterly whether further developments could affect the amount of the accrued liability previously established or would make a loss contingency both probable and reasonably estimable.
The Company also provides disclosure when it believes it is reasonably possible that a material loss will be incurred or when it believes it is reasonably possible that the amount of a loss will exceed the recorded liability. The Company reviews loss contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. This estimated range of possible losses is based upon currently available information and is subject to significant judgment and a variety of assumptions, as well as known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate.
The Company is subject to a variety of litigation, claims, other disputes and governmental proceedings that arise from time to time in the ordinary course of its business, including litigation related to its prior development activities. The Company cannot make assurances that it will be successful in defending these matters. Based on current knowledge, the Company does not believe that loss contingencies arising from pending litigation, claims, other disputes and governmental proceedings, including those described herein, will have a material adverse effect on the consolidated financial position or liquidity of the Company. However, in light of the inherent uncertainties involved in these matters, an adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period.
The Company is subject to costs arising out of environmental laws and regulations, which include obligations to remove or limit the effects on the environment of the disposal or release of certain wastes or substances at various sites, including sites which have been previously sold. It is the Company’s policy to accrue and charge against earnings environmental cleanup costs when it is probable that a liability has been incurred and a range of loss can be reasonably estimated. As assessments and cleanups proceed, these accruals are reviewed and adjusted, if necessary, as additional information becomes available. The Company is in the process of assessing certain properties in regard to the effects, if any, on the environment from the disposal or release of wastes or substances. Management is unable to quantify future rehabilitation costs above present accruals at this time or provide a reasonably estimated range of loss.
Other litigation, claims and disputes, including environmental matters, are pending against the Company. Accrued aggregate liabilities related to the matters described above and other litigation matters were $0.2 million and $0.3 million, respectively, as of March 31, 2025 and December 31, 2024. Significant judgment is required in both the determination of probability and whether the amount of an exposure is reasonably estimable. Due to uncertainties related to these matters, accruals are based only on the information available at the time. As additional information becomes available, management reassesses potential liabilities related to pending claims and litigation and may revise its previous estimates, which could materially affect the Company’s results of operations for any particular reporting period.
The Company has retained certain self-insurance risks with respect to losses for third party liability and property damage, including its timber assets.
In 2020, the Company, as lender, entered into a $10.0 million secured revolving promissory note with the unconsolidated Latitude Margaritaville Watersound JV, as borrower. As of both March 31, 2025 and December 31, 2024, there was no balance outstanding on the Latitude JV Note. The Latitude JV Note was provided by the Company to finance the development of the pod-level, non-spine infrastructure. Future advances, if any, will be repaid by the JV as each home is sold by the JV, with the aggregate unpaid principal and all accrued and unpaid interest due at maturity in June 2025. The note is secured by a mortgage and security interest in and on the real property and improvements located on the real property of the JV. See Note 4. Joint Ventures for additional information.
As of March 31, 2025 and December 31, 2024, the Company was required to provide surety bonds that guarantee completion and maintenance of certain infrastructure in certain development projects and mitigation banks, as well as other financial guarantees of $46.7 million and $53.1 million, respectively, as well as standby letters of credit in the amount of $0.2 million and $0.7 million, respectively, which may potentially result in liability to the Company if certain obligations of the Company are not met.
As of March 31, 2025, the Company had a total of $42.3 million in construction and development related contractual obligations.
In 2019, the Company’s unconsolidated Pier Park TPS JV, entered into a $14.4 million loan (the “Pier Park TPS JV Loan”). The loan bears interest at SOFR plus 2.6% and provides for monthly principal and interest payments with a final balloon payment at maturity in January 2026. The loan is secured by the real and personal property and certain other Security Interests. In connection with the loan, the Company, a wholly-owned subsidiary of the Company and the Company’s JV partner entered into a joint and several payment and performance guarantee in favor of the lender. The guarantee contains customary provisions providing for full recourse upon the occurrence of certain events. The Pier Park TPS JV entered into an interest rate swap to hedge cash flows tied to changes in the underlying floating interest rate tied to SOFR. The interest rate swap matures in January 2026 and fixed the variable rate on the related debt, initially at $14.4 million to a rate of 5.2%. As of March 31, 2025 and December 31, 2024, $13.1 million and $13.2 million, respectively, was outstanding on the Pier Park TPS JV Loan. See Note 4. Joint Ventures and Note 5. Financial Instruments and Fair Value Measurements for additional information.
In 2020, the Company’s unconsolidated Latitude Margaritaville Watersound JV, entered into a $45.0 million loan, as amended (the “Latitude Margaritaville Watersound JV Loan”). The loan bears interest at SOFR plus 2.5%, with a floor of 3.0%. The loan provides for monthly interest payments with a final balloon payment at maturity in December 2025, with an option to extend the maturity date by one year, subject to bank approval. The loan is secured by the real and personal property and certain other Security Interests. In connection with the loan, the Company and the Company’s JV partner entered into an unconditional guaranty of completion of certain homes and related improvements in favor of the lender. As of March 31, 2025 and December 31, 2024, $25.9 million and $41.2 million, respectively, was outstanding on the Latitude Margaritaville Watersound JV Loan. See Note 4. Joint Ventures for additional information.
In 2021, the Company’s unconsolidated Watersound Fountains Independent Living JV, entered into a $41.9 million loan (the “Watersound Fountains JV Loan”). The loan bears interest at SOFR plus 2.1%, with a floor of 2.6%. The loan provides for interest only payments for the first forty-eight months and principal and interest payments thereafter with a final balloon payment at maturity in April 2026. The loan includes an option for an extension of the maturity date by twelve months, subject to certain conditions, which would provide for continued monthly principal and interest
payments with a final balloon payment at the extended maturity date. The loan is secured by the real property and certain other Security Interests. In connection with the loan, the Company executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Watersound Fountains JV Loan. The guarantee contains customary provisions providing for full recourse upon the occurrence of certain events. The Company, as the guarantor, receives a quarterly fee related to the guarantee from its JV partners based on the JV partners’ ownership percentage. As of both March 31, 2025 and December 31, 2024, $41.7 million was outstanding on the Watersound Fountains JV Loan. See Note 4. Joint Ventures for additional information.
In 2022, the Company’s unconsolidated Electric Cart Watersound JV, entered into a $5.4 million loan (the “Electric Cart Watersound JV Loan”). The loan bears interest at SOFR plus 1.8%, with a floor of 2.1%. The loan provides for monthly principal and interest payments with a final balloon payment at maturity in September 2032. The loan is secured by the real property and certain other Security Interests. In connection with the loan, the Company, a wholly-owned subsidiary of the Company and the Electric Cart Watersound JV entered into a joint and several payment and performance guarantee in favor of the lender. After the initial forty-eight months of the loan, the Company’s liability as guarantor under the loan will be reduced to 50% of the outstanding principal balance upon reaching a certain debt service coverage and other conditions. The Company is the sole guarantor and receives a quarterly fee related to the guarantee from its JV partner based on the JV partner’s ownership percentage. As of March 31, 2025 and December 31, 2024, $4.3 million and $4.4 million, respectively, was outstanding on the Electric Cart Watersound JV Loan. See Note 4. Joint Ventures for additional information.
The Company has assessed the need to record a liability for the guarantees related to the Company’s unconsolidated JVs and did not record an obligation as of both March 31, 2025 and December 31, 2024. As of both March 31, 2025 and December 31, 2024, allowance for credit losses related to the contingent aspect of these guarantees, based on historical experience and economic trends, was $0.1 million and is included within accounts payable and other liabilities on the condensed consolidated balance sheets.
As part of a certain sale of forestry land in 2014, the Company generated significant tax gains. The installment note’s structure allowed the Company to defer the resulting federal and state tax liability of $45.6 million until 2029, the maturity date for the installment note. The Company has a deferred tax liability related to the gain in connection with the sale. At the maturity date of the installment note in 2029, the $200.0 million time deposit included in investments held by special purpose entities will be used to pay the $180.0 million of principal for the Senior Notes held by special purpose entity and the remaining $20.0 million will become available to the Company, which can be used to pay a portion of the tax liability. See Note 5. Financial Instruments and Fair Value Measurements for additional information.
18. Related Party Transactions
The Company provides mitigation bank credits, impact and other fees, property for lease and services to certain unconsolidated JVs. During the three months ended March 31, 2025, the Company recognized $0.9 million related to revenue from these transactions. During the three months ended March 31, 2024, the Company did not recognize any revenue related to these transactions. As of March 31, 2025 and December 31, 2024, receivables from unconsolidated JVs were $0.2 million and less than $0.1 million, respectively.
The Watersound Management JV provides leasing management services for the Company’s multi-family communities. The Company incurred expense related to these transactions of $0.7 million and $0.6 million during the three months ended March 31, 2025 and 2024, respectively. See Note 4. Joint Ventures for additional information.
The Company incurred land development and planning costs reimbursements to the Latitude Margaritaville Watersound JV of $0.5 million and $0.8 million during the three months ended March 31, 2025 and 2024, respectively, which were primarily included in investment in real estate, net on the condensed consolidated balance sheets. As of March 31, 2025, the Company did not have any outstanding payables to the Latitude Margaritaville Watersound JV. As of December 31, 2024, $0.5 million was payable to the Latitude Margaritaville Watersound JV. See Note 4. Joint Ventures for additional information.
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19. Subsequent Events
On April 23, 2025, the Company’s Board of Directors declared a cash dividend of $0.14 per share on the Company’s common stock, payable on June 26, 2025, to shareholders of record at the close of business on June 10, 2025.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes in Item 1 and with the audited consolidated financial statements and the related notes included in our Annual Report on Form 10-K. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including the risks and uncertainties described in “Forward-Looking Statements” below and “Risk Factors” beginning on page 7 of our Annual Report on Form 10-K. Our actual results may differ materially from those contained in or implied by any forward-looking statements. We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this Quarterly Report on Form 10-Q, unless required by law.
Business Overview
St. Joe is a diversified real estate development, asset management and operating company with all of its real estate assets and operations in Northwest Florida. We intend to use existing assets for residential, hospitality and commercial ventures. We have significant residential and commercial land-use entitlements. We actively seek higher and better uses for our real estate assets through a range of development activities. As part of our core business strategy, we have created a meaningful portion of our business through JVs. We enter into these arrangements for the purposes of developing real estate and other business activities, which we believe allows us to complement our growth strategy, leverage industry expertise and diversify our business. We may also partner with or explore the sale of discrete assets when we and/or others can better deploy resources. We seek to continue to enhance the value of our owned real estate assets by developing residential, commercial and hospitality projects to meet market demand. Approximately 87% of our real estate is located in Florida’s Bay, Gulf, and Walton counties. Approximately 90% of our real estate land holdings are located within fifteen miles of the Gulf of Mexico.
We believe our present capital structure, liquidity and land provide us with years of opportunities to increase recurring revenue and long-term value for our shareholders. We intend to continue to focus on our core business activity of real estate development, asset management and operations by expanding our portfolio of income producing commercial properties, developing long-term, scalable residential communities and growing our hospitality offerings. We continue to develop a broad range of asset types that we believe will provide acceptable rates of return, grow recurring revenues and support future business. Capital commitments will be funded with cash proceeds from completed projects, existing cash, owned-land, partner capital and financing arrangements. We do not anticipate immediate benefits from investments. Timing of projects may be subject to delays caused by factors beyond our control. We may also choose to operate rather than lease assets, lease rather than sell assets, or sell improved rather than unimproved land that may delay revenue and profits.
Our real estate investment strategy focuses on projects that meet long-term risk-adjusted return criteria. Our practice is to only incur such expenditures when our analysis indicates that a project will generate a return equal to or greater than the threshold return over its life.
Highlights for the first quarter of 2025 compared to the first quarter 2024 include:
Market Conditions
Throughout the first three months of 2025, we continued to generate positive financial results. While macroeconomic factors such as tariffs, inflation, elevated interest rates, higher insurance costs, supply chain disruptions, labor shortages, financial institution disruptions and geopolitical conflicts, among other things, continued to produce economic headwinds and impacted buyer sentiment, demand across our segments remains strong. We believe this is primarily due to the continued growth of Northwest Florida as a result of increased migration, which we attribute to the region’s high quality of life, natural beauty and outstanding amenities.
Despite the strong demand across our segments, we also continue to feel the impact from the aforementioned macroeconomic factors. In addition, inflation, higher insurance costs and elevated interest rates, have increased operating costs and loan rates, as compared to recent years. While elevated interest rates have negatively impacted buyers’ ability to obtain financing and the housing market generally, the impact has been offset by the net migration into our markets, limited housing supply relative to demand and the number of cash buyers. Market conditions have also not caused an increase in cancellation rates as homebuilders have continued to perform on their contractual obligations with us.
Given our diverse portfolio of residential holdings, the mix of sales and pricing from different communities may impact revenue and margins period over period, as discussed in more detail below.
Reportable Segments
We conduct primarily all of our business in the following three reportable segments: (1) residential, (2) hospitality and (3) commercial.
The following table sets forth the relative contribution of these reportable segments to our consolidated operating revenue:
Segment Operating Revenue
35.0
35.1
43.0
45.6
20.7
18.4
1.3
0.9
100.0
For more information regarding our reportable segments see Note 16. Segment Information.
Residential Segment
Our residential segment typically plans and develops residential communities of various sizes across a wide range of price points and sells homesites to homebuilders or retail consumers. Our residential segment also evaluates opportunities to enter into JV agreements for specific communities such as Latitude Margaritaville Watersound.
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The residential segment generates revenue from sales of homesites, homes and other residential land and certain homesite residuals from homebuilder sales that provide us a percentage of the sale price of the completed home if the home price exceeds a negotiated threshold. Revenue is recognized at the point in time when a sale is closed and title and control have been transferred to the buyer. The residential segment also generates revenue from the sale of tap and impact fee credits, marketing fees and other fees on certain transactions. Certain homesite residuals and other revenue related to homebuilder homesite sales are recognized in revenue at the point in time of the closing of the sale. The residential segment incurs costs from direct costs (e.g., development and construction costs), selling costs and other indirect costs.
Our residential segment includes the Watersound Origins, Watersound Origins West, Watersound Camp Creek, Breakfast Point East, Titus Park, Bayside at Ward Creek, Breakwater at Ward Creek, Salt Grass at Ward Creek, College Station, Park Place, Salt Creek at Mexico Beach, and WindMark Beach communities, which are large scale, multi-phase communities with current development activity, sales activity or future phases. Homesites in these communities are developed based on market demand and sold primarily to homebuilders and on a limited basis to retail customers.
The East Lake Creek, East Lake Powell, Lake Powell, Teachee, West Bay Creek and West Laird communities have phases of homesites in preliminary planning or permitting. Homesites in these communities will be developed based on market demand.
The SummerCamp Beach community has homesites available for sale and along with the RiverCamps and SouthWood communities, have additional lands for future development.
The Latitude Margaritaville Watersound community is a planned 55+ active adult residential community in Bay County, Florida. The community is located near the Intracoastal Waterway with convenient access to the Northwest Florida Beaches International Airport. The community is being developed through our unconsolidated Latitude Margaritaville Watersound JV with our partner Minto Communities USA, a homebuilder and community developer, and is estimated to include approximately 3,500 residential homes, which are being developed in smaller increments of discrete neighborhoods. As of March 31, 2025, the unconsolidated Latitude Margaritaville Watersound JV had completed 1,855 home sale transactions of the total estimated 3,500 homes planned in the community and had 264 homes under contract, which are expected to result in a sales value to the JV of approximately $158.0 million at closing of the homes. See Note 4. Joint Ventures for additional information.
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The residential homesite pipeline by community/project is as follows:
Residential Homesite Pipeline (a)
Platted or
Additional
Under
Engineering
Entitlements with
Community/Project
Location
Development
or Permitting
Concept Plan
Breakfast Point East (b)
Bay County, FL
160
85
350
College Station
209
298
East Lake Creek (b)
200
East Lake Powell (c)
Lake Powell (d)
327
1,025
1,352
Latitude Margaritaville Watersound (d) (e)
804
841
1,645
Salt Creek at Mexico Beach (b)
131
154
308
Salt Creek at Mexico Beach Townhomes (b)
Park Place
193
RiverCamps (c)
149
SouthWood (f)
Leon County, FL
920
SummerCamp Beach (b)
Franklin County, FL
260
277
Teachee (d)
1,750
Titus Park
140
704
Bayside at Ward Creek (d)
333
338
Breakwater at Ward Creek (d)
117
214
Salt Grass at Ward Creek (d)
305
498
Watersound Camp Creek (f)
Walton County, FL
48
Watersound Origins (f)
127
Watersound Origins West (d)
173
358
2,759
3,290
West Bay Creek (d)
5,250
West Laird (d)
1,068
1,117
2,185
WindMark Beach (f)
Gulf County, FL
176
306
329
811
Total Homesites
2,206
3,952
15,151
21,309
In addition to the communities listed above, we have a number of other residential project concepts in various stages of planning and evaluation.
As of March 31, 2025, we had twenty different homebuilders within our residential communities. As of March 31, 2025, we had 952 residential homesites under contract, which are expected to result in revenue of approximately $94.4 million, plus residuals, at closing of the homesites over the next several years. By comparison, as of March 31, 2024, we had 1,335 residential homesites under contract, with an expected revenue of approximately $119.8 million, plus residuals. The change in homesites under contract is due to homesite transactions since the end of the prior period and the amount of remaining homesites in current phases of the residential communities. Homesite prices vary significantly by community and often sell in concentrated transactions that may impact period over period results. As of March 31, 2025, in addition to the 952 homesites under contract in other residential communities, our unconsolidated Latitude Margaritaville Watersound JV had 264 homes under contract, which together with the 952 homesites are expected to result in a sales value of approximately $252.4 million at closing of the homesites and homes.
Hospitality Segment
Our hospitality segment features a private membership club (the “Watersound Club”), hotel operations, food and beverage operations, golf courses, beach clubs, retail outlets, gulf-front vacation rentals, marinas and other entertainment
assets. The hospitality segment generates revenue from membership sales, golf courses, lodging at our hotels, short-term vacation rentals, food and beverage operations, merchandise sales, marina operations (including boat slip rentals, boat storage fees and fuel sales), other resort and entertainment activities and beach clubs, which includes food and beverage operations of the WaterColor Beach Club. Hospitality revenue is generally recognized at the point in time services are provided and represent a single performance obligation with a fixed transaction price. Hospitality revenue recognized over time includes non-refundable club membership initiation fees, club membership dues and other membership fees. The hospitality segment incurs costs from the services and goods provided, personnel costs, maintenance of the facilities and holding costs of the assets. From time to time, we may explore the sale of certain hospitality properties, the development of new hospitality properties, as well as new entertainment and management opportunities. Some of our JV assets and other assets incur interest and financing expenses related to the loans as described in Note 8. Debt, Net.
Watersound Club provides club members access to our member facilities, which include the Watersound Beach Club, Camp Creek golf course and amenities, Shark’s Tooth golf course and tennis center and The Third golf course, which opened in November 2024. In addition, in June 2024, we opened The Sporting Preserve, a 12-stand sporting clays course. Watersound Club offers different types of club memberships, each with different access rights and associated fee structures. Watersound Club is focused on creating an outstanding membership experience combined with the luxurious aspects of a destination resort. Watersound Beach Club located on Scenic Highway 30A with over one mile of Gulf of Mexico frontage, has two resort-style pools, two restaurants, three bars, kid’s room and a recreation area. Camp Creek includes an 18-hole golf course, a full club house, health and wellness center, three restaurants, a tennis and pickle ball center, a resort-style pool complex with separate adult pool, a golf teaching academy, pro shop and multi-sport fields. Shark’s Tooth includes an 18-hole golf course, tennis center, a full club house, a pro shop, as well as two food and beverage outlets. The Third includes an 18-hole golf course. Guests of some of our hotels also have access to certain Watersound Club amenities.
Watersound Origins amenities include a resort-style pool, fitness center, pickle ball courts and tennis courts located in the community. Access to these amenities is reserved to Watersound Origins and Watersound Origins West members consisting of the communities’ residents. In addition, an executive golf course located in the community is available to residents and for public play.
We own and operate the award-winning WaterColor Inn (which includes the Fish Out of Water restaurant) and The Pearl Hotel (which includes the Havana Beach Bar & Grill restaurant); the Camp Creek Inn, the Hilton Garden Inn Panama City Airport, the Homewood Suites by Hilton Panama City Beach, the Hotel Indigo Panama City Marina, the Home2 Suites by Hilton Santa Rosa Beach, the Watersound Inn and two gulf-front vacation rental houses. With our JV partners, we own and operate The Lodge 30A and the Embassy Suites by Hilton Panama City Beach Resort. We also operate the WaterColor Beach Club, which includes food and beverage operations and other hospitality related activities, such as beach chair rentals.
Our hotel portfolio by property is as follows:
Hotel
Rooms (a)
Camp Creek Inn
WaterColor Inn
The Pearl Hotel
Watersound Inn
The Lodge 30A (b)
Home2 Suites by Hilton Santa Rosa Beach
107
Embassy Suites by Hilton Panama City Beach Resort (b)
255
Hilton Garden Inn Panama City Airport
143
Homewood Suites by Hilton Panama City Beach
Hotel Indigo Panama City Marina
124
TownePlace Suites by Marriott Panama City Beach Pier Park (c)
Residence Inn Panama City Beach Pier Park (d)
121
Total rooms
1,298
We own and operate two marinas, the Point South Marina Bay Point in Bay County, Florida and Point South Marina Port St. Joe in Gulf County, Florida. We are planning new marinas along the Intracoastal Waterway.
We also own and operate retail stores, two standalone restaurants and other entertainment assets.
In addition to the properties listed above, we have a number of hospitality projects in various stages of planning.
Commercial Segment
Our commercial segment includes leasing of commercial property, multi-family, senior living, self-storage and other assets. The commercial segment also oversees the planning, development, entitlement, management and sale of our commercial and forestry land holdings for a variety of uses, including a broad range of retail, office, hotel, senior living, multi-family, self-storage and industrial properties. We provide development opportunities for national, regional and local retailers and other strategic partners in Northwest Florida. We own and manage retail shopping centers and develop commercial parcels. We are currently developing the Watersound Town Center in Walton County, Florida and Watersound West Bay Center in Bay County, Florida. These lifestyle centers are complementary to the Watersound Origins, Watersound Origins West and Latitude Margaritaville Watersound residential communities. In conjunction with Florida State University (“FSU”) and Tallahassee Memorial Hospital (“TMH”), we are in the process of developing an 87-acre medical campus in Panama City Beach, Florida, the first building of which opened in July 2024. We have large land holdings near the Pier Park retail center, adjacent to the Northwest Florida Beaches International Airport, near or within business districts in the region and along major roadways. We lease land for various other uses. The commercial segment manages our timber holdings in Northwest Florida which includes growing and selling pulpwood, sawtimber and other products.
The commercial segment generates leasing revenue and incurs leasing expenses primarily from maintenance and management of our properties, personnel costs and asset holding costs. Our commercial segment generates revenue from the sale of developed and undeveloped land, timber holdings or land with limited development and/or entitlements and the sale of commercial operating properties. Real estate sales in our commercial segment incur costs of revenue directly associated with the land, development, construction, timber and selling costs. Our commercial segment generates timber revenue primarily from open market sales of timber on site without the associated delivery costs. Some of our JV assets and other assets incur interest and financing expenses related to loans as described in Note 8. Debt, Net.
Total units and percentage leased for multi-family and senior living communities by location are as follows:
Percentage
Leased
Units
of Units
Planned (a)
Completed
Multi-family
Pier Park Crossings (b)
240
216
Pier Park Crossings Phase II (b)
120
111
Watersound Origins Crossings (b)
217
207
95
202
North Bay Landing
220
92
Mexico Beach Crossings (b)
158
73
151
Origins Crossings Townhomes (c)
64
WindMark Beach
Total multi-family units (d)
1,128
983
87
961
Senior living communities
Watercrest (b)
Watersound Fountains (e)
148
Total senior living units
142
Total units
1,383
1,131
82
1,103
80
As of March 31, 2025, our leasing portfolio consists of approximately 1,180,000 square feet of leasable space for mixed-use, retail, industrial, office, self-storage and medical uses. Through separate unconsolidated JVs, other commercial properties that are operated by our JV partners include a 124-room TownePlace Suites by Marriott, a 121-room Residence Inn, a Busy Bee branded fuel station and convenience store, which includes a Starbucks, and a golf cart sales and service facility, all located in Bay County, Florida.
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The total net rentable square feet and percentage leased of leasing properties are as follows:
Net
Rentable
Square
Feet*
Pier Park North (a)
320,310
99
VentureCrossings
303,605
Watersound Town Center (b) (c)
153,825
86
155,962
FSU/TMH Medical Campus (d)
78,670
Beckrich Office Park (c) (e) (f)
78,322
83
Watersound Self-Storage
67,694
WindMark Beach Town Center (c) (g)
44,748
WaterColor Town Center (c) (h)
22,199
76
Cedar Grove Commerce Park
19,389
Port St. Joe Commercial
16,964
Beach Commerce Park (c)
14,800
South Walton Commerce Park
11,570
Watersound Gatehouse (c)
10,271
Other (i)
Bay, Gulf and Walton Counties, FL
37,590
1,179,957
1,182,094
We have commercial projects under development and construction as detailed in the table below. In addition to these properties, we have other commercial buildings and sites in various stages of planning and development.
Completed Square Feet
Square Feet Under Construction
Additional Planned Square Feet
Total Square Feet*
Watersound Town Center (a)
13,200
230,838
400,000
Watersound West Bay Center
3,366
18,304
478,330
500,000
FSU/TMH Medical Campus
241,330
320,000
237,998
31,504
950,498
1,220,000
Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. We base these estimates on historical experience, available current market information and on various other assumptions that management believes are reasonable under the circumstances. Additionally, we evaluate the results of these estimates on an on-going basis. Management’s estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and our accounting estimates are subject to change.
Critical accounting policies that we believe reflect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements are set forth in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes in these policies during the first three months of 2025, however we cannot assure you that these policies will not change in the future.
Recently Adopted and Issued Accounting Pronouncements
See Note 2. Summary of Significant Accounting Policies to our condensed consolidated financial statements included in this report for recently issued or adopted accounting standards, including the date of adoption and effect on our condensed consolidated financial statements.
Seasonality and Market Variability
Our operations may be affected by seasonal fluctuations. The revenues and earnings from our business segments may vary significantly from period to period. Homebuilders tend to buy multiple homesites in sporadic transactions. In addition, homesite prices vary significantly by community, which further impacts period over period results. Therefore, there may be reporting periods in which we have no, or significantly less, revenue from residential or commercial real estate sales. We may also choose to operate rather than lease assets, lease rather than sell assets, or sell improved rather than unimproved land that may delay revenue and profits.
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Results of Operations
Consolidated Results
The following table sets forth a comparison of the results of our operations:
In millions
38.3
34.2
39.6
39.3
16.3
14.3
94.2
87.8
18.8
16.0
32.4
30.3
7.4
7.2
6.6
7.1
12.1
11.2
77.3
71.8
16.9
3.4
(7.8)
(8.5)
10.2
(0.2)
(0.5)
5.6
1.8
22.5
17.8
(5.8)
(4.7)
16.7
52
Real Estate Revenue and Gross Profit
The following table sets forth a comparison of our total consolidated real estate revenue and gross profit:
% (a)
Dollars in millions
Residential real estate revenue
32.9
85.9
30.8
90.1
Commercial and forestry real estate revenue
3.2
8.4
1.4
Timber revenue
1.2
3.5
Other revenue
1.0
0.8
Residential real estate
15.0
15.8
51.3
Commercial and forestry real estate
96.9
1.1
78.6
Timber
83.3
40.0
0.3
37.5
Gross profit
19.5
50.9
18.2
53.2
Residential Real Estate Revenue and Gross Profit. During the three months ended March 31, 2025, residential real estate revenue increased $2.1 million, or 6.8%, to $32.9 million, as compared to $30.8 million during the same period in 2024. During the three months ended March 31, 2025, residential real estate gross profit decreased $0.8 million to $15.0 million (or gross margin of 45.6%), as compared to $15.8 million (or gross margin of 51.3%) during the same period in 2024. During the three months ended March 31, 2025, we sold 249 homesites, compared to 216 homesites during the same period in 2024. During the three months ended March 31, 2025 and 2024, the average base revenue, excluding homesite residuals, per homesite sold was approximately $114,000 and $117,000, respectively, due to the mix of sales from different communities. The revenue, gross profit and margin for each period was impacted by the difference in pricing among the communities, the difference in the cost of the homesite development and the volume of sales within each of the communities. The number of homesites sold varied each period due to the timing of homebuilder contractual closing obligations in our residential communities.
Commercial and Forestry Real Estate Revenue and Gross Profit. During the three months ended March 31, 2025, we had two commercial and forestry real estate sales totaling approximately 133 acres for $3.2 million, resulting in a gross profit of $3.1 million (or gross margin of 96.9%). During the three months ended March 31, 2024, we had two commercial and forestry real estate sales totaling approximately 76 acres for $1.4 million, resulting in a gross profit of $1.1 million (or gross margin of 78.6%).
Revenue from commercial and forestry real estate can vary significantly from period-to-period depending on the proximity to developed areas and mix of real estate sold in each period, with varying compositions of retail, office, industrial, timber and other commercial uses. Our gross margin can vary significantly from period-to-period depending on the characteristics of property sold. Sales of forestry land typically have a lower cost basis than residential and commercial real estate sales. In addition, our cost basis in residential and commercial real estate can vary depending on the amount of development or other costs incurred on the property.
Timber Revenue and Gross Profit. During the three months ended March 31, 2025 and 2024 timber revenue was comparable. There were 74,000 tons of wood products sold at an average price per ton of $14.61 during the three months ended March 31, 2025, as compared to 75,000 tons of wood products sold at an average price per ton of $14.83, during the same period in 2024. Timber gross margin was 83.3% during both the three months ended March 31, 2025 and 2024.
Other Revenue. Other revenue primarily consists of title insurance business revenue and mitigation bank credit sales.
Hospitality Revenue and Gross Profit
9.0
Gross margin
22.9
Hospitality revenue increased $0.3 million, or 0.8%, to $39.6 million during the three months ended March 31, 2025, as compared to $39.3 million in the same period in 2024. The increase in hospitality revenue was primarily related to the growth in membership dues and membership ancillary spend as well as The Third golf course, which opened in November 2024 and the renovated Shark’s Tooth clubhouse, which reopened in February 2025. The increase in revenue was partially offset by a decrease in hotel operations, due to the timing of holidays and school breaks. As of March 31, 2025, Watersound Club had 3,498 members, compared with 3,433 members as of March 31, 2024, a net increase of 65 members. As of both March 31, 2025 and 2024, we had 1,053 operational hotel rooms (excluding 245 and 124 hotel rooms related to unconsolidated JVs, respectively). Hospitality gross margin decreased to 18.2% during the three months ended March 31, 2025, compared to 22.9% during the same period in 2024. The decrease in gross margin was primarily due to opening and ongoing operating costs for The Third golf course and reopening of the Shark’s Tooth clubhouse during the current period.
Leasing Revenue and Gross Profit
8.9
54.6
49.7
Leasing revenue increased $2.0 million, or 14.0%, to $16.3 million during the three months ended March 31, 2025, as compared to $14.3 million in the same period in 2024. The increase was primarily due to additional multi-family, commercial property and marina leases, as well as other leases. Leasing gross margin increased to 54.6% during the three months ended March 31, 2025, as compared to 49.7% during the same period in 2024. The increase in leasing gross margin was primarily due to additional leases in the current period.
Corporate and Other Operating Expenses
Employee costs
3.7
Property taxes and insurance
1.6
1.5
Professional fees
Marketing and owner association costs
0.2
Occupancy, repairs and maintenance
0.1
Other miscellaneous
0.5
Total corporate and other operating expenses
Corporate and other operating expenses decreased $0.5 million to $6.6 million during the three months ended March 31, 2025, as compared to $7.1 million in the same period in 2024. The decrease was primarily due to employee costs related to bonuses, partially offset by an increase in professional fees.
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Depreciation, Depletion and Amortization
Depreciation, depletion and amortization expense increased $0.9 million during the three months ended March 31, 2025, as compared to the same period in 2024, primarily due to new hospitality and commercial assets placed in service. Depreciation is a non-cash, GAAP expense which is amortized over an asset’s useful life, while maintenance and repair expenses are period costs and expensed as incurred.
Investment income, net primarily includes (i) interest, dividends and accretion income accrued or received on our cash, cash equivalents and other investments, (ii) interest income earned on the time deposit held by SPE and (iii) interest earned on notes receivable and other receivables as detailed in the table below:
0.7
Interest income from investments in special purpose entities
2.0
0.6
Investment income, net for the three months ended March 31, 2025 and 2024 were comparable.
Interest expense primarily includes interest incurred on project financing, the Senior Notes issued by Northwest Florida Timber Finance, LLC, CDD debt and finance leases, as well as amortization of debt discount and premium and debt issuance costs as detailed in the table below:
Interest expense and amortization of discount and issuance costs for Senior Notes issued by special purpose entity
7.8
8.5
Interest expense decreased $0.7 million, or 8.2%, to $7.8 million during the three months ended March 31, 2025, as compared to $8.5 million in the same period in 2024. The decrease in interest expense is primarily due to repayment of project financing and a decrease in interest rates from the prior period. See Note 8. Debt, Net and Note 15. Other Income, Net for additional information regarding project financing.
Equity in income (loss) from unconsolidated joint ventures includes our proportionate share of earnings or losses of unconsolidated JVs accounted for using the equity method as detailed in the table below. See Note 4. Joint Ventures for additional information.
12.7
8.3
(1.0)
(0.7)
(1.1)
Other expense, net primarily includes other income and expense items as detailed in the table below:
Other expense, net decreased $0.3 million to $0.2 million during the three months ended March 31, 2025, as compared to $0.5 million in the same period in 2024. Miscellaneous expense, net during the three months ended March 31, 2024, includes a $0.5 million net loss on disposal of assets. See Note 15. Other Income, Net for additional information.
Income Tax Expense
Income tax expense was $5.8 million during the three months ended March 31, 2025, as compared to $4.7 million during the same period in 2024. Our effective tax rate was 25.8% for the three months ended March 31, 2025, as compared to 25.0% during the same period in 2024.
Our effective rate for the three months ended March 31, 2025 and 2024, differed from the federal statutory rate of 21.0% primarily due to state income taxes, nontaxable or nondeductible and other differences. See Note 11. Income Taxes for additional information.
Segment Results
The table below sets forth the consolidated results of operations of our residential segment:
30.5
28.8
2.4
Total real estate revenue
33.0
Cost of real estate and other revenue
17.9
19.2
16.2
13.8
14.6
13.2
8.7
27.0
23.3
Three months ended March 31, 2025 compared to the three months ended March 31, 2024
The following table sets forth our consolidated residential real estate revenue and cost of revenue activity:
Cost of
Gross
Sold
Revenue
Profit
Margin
Homesites
249
16.6
13.9
14.4
50.0
Total consolidated
Unconsolidated
Homes (a)
192
177
Total consolidated and unconsolidated
441
393
The following discussion sets forth details of the consolidated results of operations of our residential segment.
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Homesites. Revenue from homesite sales increased $1.7 million, or 5.9%, during the three months ended March 31, 2025, as compared to the same period in 2024, primarily due to the mix and number of homesites sold per community and the timing of homebuilder contractual closing obligations in our residential communities. During the three months ended March 31, 2025 and 2024, the average base revenue, excluding homesite residuals, per homesite sold was approximately $114,000 and $117,000, respectively, due to the mix of sales from different communities. Revenue includes estimated homesite residuals of $1.1 million and $2.1 million during the three months ended March 31, 2025 and 2024, respectively. The decrease in estimated homesite residuals was due to the mix and number of homesites sold in specific communities during the current period. Gross margin decreased to 45.6% during the three months ended March 31, 2025, as compared to 50.0% during the same period in 2024. Gross margin may vary each period depending on the location of homesite sales.
Other revenue includes tap and impact fee credits sold, marketing fees and other fees. Other revenue includes estimated fees related to homebuilder homesite sales of $0.5 million and $0.8 million, during the three months ended March 31, 2025 and 2024, respectively.
Other operating expenses include salaries and benefits, property taxes, marketing, professional fees, project administration, owner association and CDD assessments and other administrative expenses.
Investment income, net primarily consists of interest earned on the unimproved land contribution to our unconsolidated Latitude Margaritaville Watersound JV as home sales are transacted in the community. See Note 4. Joint Ventures for additional information. Interest expense primarily consists of interest incurred on our portion of the total outstanding CDD debt. See Note 8. Debt, Net for additional information.
Equity in income from unconsolidated joint ventures includes our proportionate share of earnings or losses of an unconsolidated JV accounted for using the equity method. Equity in income from unconsolidated joint ventures increased $4.4 million during the three months ended March 31, 2025, as compared to the same period in 2024. The increase was due to a higher average margin per home sold and the increased volume of home sale transactions during the current period related to our unconsolidated Latitude Margaritaville Watersound JV. The Latitude Margaritaville Watersound JV completed 192 home sale transactions during the three months ended March 31, 2025, compared to 177 home sale transactions during the same period in 2024. See Note 4. Joint Ventures for additional information.
The table below sets forth the consolidated results of operations of our hospitality segment:
40.4
37.9
2.1
Other expense:
(2.7)
(3.0)
(0.4)
Total other expense, net
(2.8)
(3.4)
Loss before income taxes
(1.3)
The following table sets forth details of our hospitality segment consolidated revenue and gross profit:
Profit (Deficit)
Clubs (a)
19.6
7.5
19.0
8.2
43.2
Hotels
18.0
(4.5)
17.4
Revenue from our clubs increased $0.6 million, or 3.2%, during the three months ended March 31, 2025, as compared to the same period in 2024. The increase in revenue was due to growth in membership dues and membership ancillary spend, as well as The Third golf course, which opened in November 2024 and the renovated Shark’s Tooth clubhouse, which reopened in February 2025. As of March 31, 2025, Watersound Club had 3,498 members, compared with 3,433 members as of March 31, 2024, a net increase of 65 members. Our clubs gross margin was 38.3% during the three months ended March 31, 2025, compared to 43.2% during the same period in 2024. The decrease in gross margin was primarily due to opening and ongoing operating costs for The Third golf course and reopening of the Shark’s Tooth clubhouse during the current period.
Revenue from our hotel operations decreased $0.2 million, or 1.1%, during the three months ended March 31, 2025, as compared to the same period in 2024. Our hotels had a negative gross margin of 1.1% for the three months ended March 31, 2025, compared to gross margin of 2.2% during the same period in 2024. The decrease in revenue and gross margin was primarily due to the timing of holidays and school breaks.
As of both March 31, 2025 and 2024, we had 1,053 operational hotel rooms (excluding 245 and 124 hotel rooms related to unconsolidated JVs, respectively).
Revenue from other hospitality operations during the three months ended March 31, 2025 and 2024, were comparable. Our other hospitality operations had a negative gross margin of 4.5% during the three months ended March 31, 2025, compared to gross margin of 17.4% during the same period in 2024. The decrease in gross margin was due to increased operational costs during the current period.
Leasing revenue includes marina boat slip and dry storage rental, as well as leases of other hospitality assets. Leasing revenue increased $0.2 million, or 28.6%, during the three months ended March 31, 2025, as compared to the same period in 2024, primarily due to increased occupancy at our marinas.
Other operating expenses include salaries and benefits, professional fees and other administrative expenses.
The increase of $0.5 million in depreciation, depletion and amortization expense during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to new properties placed in service.
Interest expense primarily includes interest incurred from our hospitality project financing. The decrease of $0.3 million in interest expense during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to repayment of project financing and a decrease in interest rates from the prior period. See Note 8. Debt, Net for additional information.
Other expense, net for the three months ended March 31, 2024, primarily includes net loss on disposal of assets.
The table below sets forth the consolidated results of operations of our commercial segment:
Commercial leasing revenue
7.3
Multi-family leasing revenue
5.8
Senior living leasing revenue
15.1
13.5
16.1
6.7
4.8
12.9
12.6
(3.2)
Equity in loss from unconsolidated joint ventures
(2.5)
(0.9)
(5.6)
(4.3)
Income (loss) before income taxes
(0.8)
The following table sets forth details of our commercial segment consolidated revenue and gross profit:
Leasing
Commercial leasing
65.8
64.4
Multi-family leasing
2.9
48.2
Senior living leasing
Total leasing
55.6
7.0
51.9
Real estate
Total real estate
93.2
80.8
12.5
64.1
9.1
56.5
60
The following discussion sets forth details of the consolidated results of operations of our commercial segment.
Total leasing revenue increased $1.6 million, or 11.9%, during the three months ended March 31, 2025, as compared to the same period in 2024. The increase was primarily due to additional multi-family and commercial property leases, as well as other leases. Total leasing gross margin during the three months ended March 31, 2025 was 55.6%, as compared to 51.9% during the same period in 2024. The increase in leasing gross margin was primarily due to additional leases in the current period. As of March 31, 2025, we had net rentable square feet of approximately 1,180,000, of which approximately 1,114,000 square feet were under lease. As of March 31, 2024, we had net rentable square feet of approximately 1,082,000, of which approximately 1,046,000 square feet were under lease. As of both March 31, 2025 and 2024, our consolidated entities had 1,235 multi-family and senior living units, of which 1,087 were leased as of March 31, 2025, compared to 1,039 leased as of March 31, 2024 (excludes 148 senior living units for the unconsolidated Watersound Fountains Independent Living JV).
We believe the diversity of our commercial segment complements the growth of our residential and hospitality segments. Commercial and forestry real estate revenue can vary depending on the proximity to developed areas and the mix and characteristics of commercial and forestry real estate sold in each period, with varying compositions of retail, office, industrial, timber and other commercial uses. During the three months ended March 31, 2025, we had two commercial and forestry real estate sales of approximately 133 acres for $3.2 million, resulting in a gross margin of approximately 96.9%. During the three months ended March 31, 2024, we had two commercial and forestry real estate sales of approximately 76 acres for $1.4 million, resulting in a gross margin of approximately 78.6%.
During the three months ended March 31, 2025 and 2024 timber revenue and gross margin were comparable. There were 74,000 tons of wood products sold at an average price per ton of $14.61 during the three months ended March 31, 2025, as compared to 75,000 tons of wood products sold at an average price per ton of $14.83, during the same period in 2024.
Other operating expenses include salaries and benefits, property taxes, CDD assessments, professional fees, marketing, project administration and other administrative expenses.
The increase of $0.4 million in depreciation, depletion and amortization expense during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to new properties placed in service.
Interest expense primarily includes interest incurred from our commercial project financing and CDD debt. The decrease of $0.4 million in interest expense during the three months ended March 31, 2025, as compared to the same period in 2024, was primarily due to repayment of project financing and a decrease in interest rates from the prior period. See Note 8. Debt, Net for additional information.
Equity in loss from unconsolidated joint ventures includes our proportionate share of earnings or losses of unconsolidated JVs accounted for using the equity method. Equity in loss from unconsolidated joint ventures was $2.5 million during the three months ended March 31, 2025, as compared to $0.9 million for the same period in 2024. The three months ended March 31, 2025, primarily include start-up, depreciation and interest expenses related to the Pier Park RI JV, which opened a 121-room hotel in April 2024. The three months ended March 31, 2025 and 2024, primarily include lease-up, depreciation and interest expenses related to the Watersound Fountains Independent Living JV, which opened a 148-unit independent senior living community in March 2024 and is currently under lease-up. See Note 4. Joint Ventures for additional information.
Liquidity and Capital Resources
As of March 31, 2025, we had cash and cash equivalents of $94.5 million, compared to $88.8 million as of December 31, 2024.
We believe that our current cash position, financing arrangements and cash generated from operations will provide us with sufficient liquidity to satisfy our anticipated working capital needs, expected capital expenditures, principal and
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interest payments on our long-term debt, authorized stock repurchases and authorized dividends for the next twelve months.
During the three months ended March 31, 2025, we invested a total of $32.7 million for capital expenditures, which includes $25.1 million for our residential segment, $2.8 million for our hospitality segment, $4.5 million for our commercial segment and $0.3 million for corporate expenditures. We anticipate that future capital commitments will be funded through cash generated from operations, cash and cash equivalents on hand and new financing arrangements. As of March 31, 2025, we had a total of $42.3 million, primarily in construction and development related contractual obligations. Capital expenditures and contractual obligations exclude amounts related to unconsolidated JVs. See Note 4. Joint Ventures for additional information.
As of March 31, 2025 and December 31, 2024, we had various loans outstanding totaling $440.2 million and $442.7 million, respectively, with maturities from May 2025 through March 2064. As of March 31, 2025, the weighted average effective interest rate of total outstanding debt was 4.8%, of which 73.8% includes fixed or swapped interest rates, and the average remaining life was 18.8 years. As of March 31, 2025, the weighted average rate on our variable rate loans, excluding the swapped portion, was 6.5%. See Note 8. Debt, Net for additional information.
In 2015, the Pier Park North JV entered into a $48.2 million loan. As of March 31, 2025 and December 31, 2024, $40.1 million and $40.4 million, respectively, was outstanding on the PPN JV Loan. The loan accrues interest at a rate of 4.1% per annum and matures in November 2025. In connection with the loan, we entered into a limited guarantee in favor of the lender, based on our percentage ownership of the JV. In addition, the guarantee can become full recourse in the case of any fraud or intentional misrepresentation by the Pier Park North JV; any voluntary transfer or encumbrance of the property in violation of the due-on-sale clause in the security instrument; upon commencement of voluntary bankruptcy or insolvency proceedings and upon breach of covenants in the security instrument. See Note 8. Debt, Net for additional information. We have begun the process to refinance the PPN JV Loan.
In 2018, the Pier Park Crossings JV entered into a $36.6 million loan, insured by HUD. As of March 31, 2025 and December 31, 2024, $34.0 million and $34.2 million, respectively, was outstanding on the PPC JV Loan. The loan bears interest at a rate of 3.1% and matures in June 2060. The loan includes a prepayment premium due to the lender of 2% - 8% for any additional principal that is prepaid through August 2031. The loan is secured by the real property and certain other Security Interests. See Note 8. Debt, Net for additional information.
In 2019, the Watercrest JV entered into a $22.5 million loan. As of March 31, 2025 and December 31, 2024, $19.4 million and $19.6 million, respectively, was outstanding on the Watercrest JV Loan. The loan bears interest at a rate of SOFR plus 2.2% and matures in June 2047. The loan is secured by the real property and certain other Security Interests. In connection with the loan, we executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Watercrest JV Loan. We are the sole guarantor and receive a quarterly fee related to the guarantee from our JV partner based on the JV partner’s ownership percentage. See Note 8. Debt, Net for additional information.
In 2019, a wholly-owned subsidiary of ours entered into a $5.5 million loan, which is guaranteed by us. As of both March 31, 2025 and December 31, 2024, $5.0 million was outstanding on the Beckrich Building III Loan. The loan bears interest at a rate of SOFR plus 1.8% and matures in August 2029. The loan is secured by the real property and certain other Security Interests. See Note 8. Debt, Net for additional information.
In 2019, the Pier Park Crossings Phase II JV entered into a $22.9 million loan, insured by HUD, as amended. As of March 31, 2025 and December 31, 2024, $21.7 million and $21.8 million, respectively, was outstanding on the PPC II JV Loan. The PPC II JV Loan bears interest at a rate of 2.7% and matures in May 2057. The loan includes a prepayment premium due to the lender of 1% - 8% for any principal that is prepaid through May 2032. The loan is secured by the real property and certain other Security Interests. See Note 8. Debt, Net for additional information.
In 2020, a wholly-owned subsidiary of ours entered into a $15.3 million loan, which is guaranteed by us. As of March 31, 2025 and December 31, 2024, $11.6 million and $11.7 million, respectively, was outstanding on the Airport Hotel Loan. The loan bears interest at SOFR plus 2.1%, with a floor of 3.0%. In February 2025, the Airport Hotel Loan
maturity date was extended from March 2025 to February 2030. During the three months ended March 31, 2025, we incurred less than $0.1 million of additional loan costs due to the modification. The loan is secured by the real property and certain other Security Interests. See Note 8. Debt, Net for additional information.
In 2020, the Pier Park Resort Hotel JV entered into a loan with an initial amount of $52.5 million up to a maximum of $60.0 million through additional earn-out requests. As of March 31, 2025 and December 31, 2024, $50.6 million and $50.9 million, respectively, was outstanding on the Pier Park Resort Hotel JV Loan. The loan matures in April 2027 and bears interest at a rate of SOFR plus 2.1%. The loan is secured by the real property and certain other Security Interests. In connection with the loan, as guarantors, we and our JV partner entered into a guarantee based on each partner’s ownership interest in favor of the lender, to guarantee the payment and performance of the borrower. As guarantor, our liability under the loan can be released upon reaching and maintaining certain debt service coverage. In addition, the guarantee can become full recourse in the case of the failure of the guarantor to abide by or perform any of the covenants or warranties to be performed on the part of such guarantor. The Pier Park Resort Hotel JV entered into an interest rate swap to hedge cash flows tied to changes in the underlying floating interest rate tied to SOFR. The interest rate swap matures in April 2027 and fixed the variable rate on the notional amount of related debt, initially at $42.0 million, amortizing to $38.7 million at swap maturity, to a rate of 3.2%. See Note 5. Financial Instruments and Fair Value Measurements and Note 8. Debt, Net for additional information.
In 2020, a wholly-owned subsidiary of ours entered into a $16.8 million loan, which is guaranteed by us. As of March 31, 2025 and December 31, 2024, $15.3 million and $15.5 million, respectively, was outstanding on the Breakfast Point Hotel Loan. The loan matures in November 2042 and bears interest at a rate of 6.0% through November 2027 and the 1-year constant maturity Treasury rate plus 3.3% from December 2027 through November 2042, with a minimum rate of 6.0% throughout the term of the loan. The loan includes a prepayment premium due to the lender of 1% of the outstanding principal balance for any additional principal that is prepaid through November 2027. The loan is secured by the real property and certain other Security Interests. See Note 8. Debt, Net for additional information.
In 2021, The Lodge 30A JV entered into a $15.0 million loan. As of March 31, 2025 and December 31, 2024, $14.0 million and $14.1 million, respectively, was outstanding on the Lodge 30A JV Loan. The loan bears interest at a rate of 3.8% and matures in January 2028. The loan is secured by the real property and certain other Security Interests. In connection with the loan, we, wholly-owned subsidiaries of ours and our JV partner entered into a joint and several payment and performance guarantee in favor of the lender. Upon reaching a certain debt service coverage ratio for a minimum of twenty-four months, our liability as guarantor will be reduced to 75% of the outstanding principal amount for a twelve-month period. The debt service coverage ratio will be tested annually thereafter and can be reduced to 50% in year four and 25% in year five. We receive a monthly fee related to the guarantee from our JV partner based on the JV partner’s ownership percentage. See Note 8. Debt, Net for additional information.
In 2021, a wholly-owned subsidiary of ours entered into a loan, as amended. In February 2025, the North Bay Landing Loan was refinanced, which increased the principal amount of the loan to $27.8 million, fixed the interest rate to 5.9% and provides for monthly payments of principal and interest through maturity in March 2060. As of March 31, 2025 and December 31, 2024, $27.8 million and $22.7 million, respectively, was outstanding on the North Bay Landing Loan. The refinanced loan terms include a prepayment premium due to the lender of 1% - 10% for any principal that is prepaid through March 2035. The refinanced loan is insured by HUD and is secured by the real property and certain other Security Interests. During the three months ended March 31, 2025, we incurred $0.5 million of loan costs due to the refinance. The three months ended March 31, 2025 includes a less than $0.1 million loss on early extinguishment of debt related to unamortized debt issuance costs, included within other income, net on the condensed consolidated statements of income. See Note 8. Debt, Net for additional information.
In 2021, a wholly-owned subsidiary of ours entered into a $28.0 million loan, which is guaranteed by us. As of March 31, 2025 and December 31, 2024, $27.2 million and $27.4 million, respectively, was outstanding on the Watersound Camp Creek Loan. The loan matures in December 2047 and bears interest at a rate of SOFR plus 2.1%, with a floor of 2.6%. The loan is secured by the real property and certain other Security Interests. As guarantor, our liability under the loan will be reduced to 50% of the outstanding principal amount upon the project reaching and maintaining a trailing six months of operations with a certain debt service coverage ratio and reduced to 25% of the outstanding principal amount upon reaching and maintaining a trailing twelve months of operations with a certain debt service coverage ratio. In addition, the guarantee can become full recourse in the case of the failure of guarantor to abide by or
63
perform any of the covenants, warranties or other certain obligations to be performed on the part of such guarantor. See Note 8. Debt, Net for additional information.
In 2021, a wholly-owned subsidiary of ours entered into a $12.0 million loan, which is guaranteed by us. As of March 31, 2025 and December 31, 2024, $8.0 million and $8.1 million, respectively, was outstanding on the Watersound Town Center Grocery Loan. The loan bears interest at SOFR plus 2.1%, with a floor of 2.3%, and matures in August 2031. The loan is secured by the real property and certain other Security Interests. As guarantor, our liability under the loan is 50% of the outstanding principal amount and will be reduced to 25% of the outstanding principal amount upon reaching a certain debt service coverage ratio. See Note 8. Debt, Net for additional information.
In 2021, a wholly-owned subsidiary of ours entered into a $21.2 million loan, which is guaranteed by us. As of March 31, 2025 and December 31, 2024, $19.6 million and $19.9 million, respectively, was outstanding on the Hotel Indigo Loan. The loan bears interest at a rate of SOFR plus 2.5%, with a floor of 2.5%. The loan matures in October 2028 and includes an option for an extension of the maturity date by sixty months, subject to certain conditions. The loan is secured by the leasehold property and certain other Security Interests. See Note 8. Debt, Net for additional information.
In 2022, the Mexico Beach Crossings JV entered into a $43.5 million loan, insured by HUD. As of March 31, 2025 and December 31, 2024, $43.0 million and $43.1 million, respectively, was outstanding on the Mexico Beach Crossings JV Loan. The loan bears interest at a rate of 3.0% and matures in March 2064. The loan includes a prepayment premium due to the lender of 1% - 9% for any principal that is prepaid through March 2034. The loan is secured by the real property and certain other Security Interests. See Note 8. Debt, Net for additional information.
In 2022, a wholly-owned subsidiary of ours entered into a $13.7 million loan, which is guaranteed by us. As of both March 31, 2025 and December 31, 2024, $12.3 million was outstanding on the Topsail Hotel Loan. The loan bears interest at a rate of SOFR plus 2.1%, with a floor of 3.0% and matures in July 2027. The loan is secured by the real property and certain other Security Interests. See Note 8. Debt, Net for additional information.
In 2022, a wholly-owned subsidiary of ours entered into a $37.0 million loan, which is guaranteed by us. As of March 31, 2025 and December 31, 2024, $33.7 million and $34.0 million, respectively, was outstanding on The Pearl Hotel Loan. The loan bears interest at a rate of 6.3% and matures in December 2032. The loan includes a prepayment fee due to the lender of 1% - 3% of the outstanding principal balance if the loan is refinanced with another financial institution through December 2027. The loan is secured by the real property and certain other Security Interests. See Note 8. Debt, Net for additional information.
In 2023, the Watersound Origins Crossings JV refinanced into a $52.9 million loan, insured by HUD. As of March 31, 2025 and December 31, 2024, $51.8 million and $52.0 million, respectively, was outstanding on the Watersound Origins Crossings JV Loan. The loan bears interest at a rate of 5.0% and matures in April 2058. The loan includes a prepayment premium due to the lender of 1% - 9% for any principal that is prepaid through April 2033. The refinanced loan is secured by the real property and certain other Security Interests. See Note 8. Debt, Net for additional information.
CDD bonds financed the construction of infrastructure improvements in some of our communities. The principal and interest payments on the bonds are paid by assessments on the properties benefited by the improvements financed by the bonds. We have recorded a liability for CDD debt that is associated with platted property, which is the point at which it becomes fixed and determinable. Additionally, we have recorded a liability for the balance of the CDD debt that is associated with unplatted property if it is probable and reasonably estimable that we will ultimately be responsible for repayment. We have recorded CDD related debt of $3.1 million as of March 31, 2025. Total outstanding CDD debt related to our land holdings was $9.5 million as of March 31, 2025, which is comprised of $7.7 million at the SouthWood community, $1.7 million at the existing Pier Park retail center and less than $0.1 million at the Wild Heron residential community. We pay interest on this total outstanding CDD debt.
As of March 31, 2025, our unconsolidated Latitude Margaritaville Watersound JV, Watersound Fountains Independent Living JV, Pier Park TPS JV, Pier Park RI JV, Busy Bee JV and Electric Cart Watersound JV had various
loans outstanding, some of which we have entered into guarantees. See Note 4. Joint Ventures and Note 17. Commitments and Contingencies for additional information.
In 2020, we, as lender, entered into a $10.0 million secured revolving promissory note with the unconsolidated Latitude Margaritaville Watersound JV, as borrower. As of both March 31, 2025 and December 31, 2024, there was no principal balance outstanding on the Latitude JV Note. The note was provided by us to finance the development of the pod-level, non-spine infrastructure. Future advances, if any, will be repaid by the JV as each home is sold by the JV, with the aggregate unpaid principal and all accrued and unpaid interest due at maturity in June 2025. The note is secured by a mortgage and security interest in and on the real property and improvements located on the real property of the JV. See Note 4. Joint Ventures and 17. Commitments and Contingencies for additional information.
During the three months ended March 31, 2025, we repurchased 123,614 shares of our common stock outstanding at an average repurchase price of $45.99, per share, for an aggregate purchase price of $5.7 million, excluding the excise tax on stock repurchases in excess of issuances as a result of the IRA. During the three months ended March 31, 2024, we did not repurchase shares of our common stock outstanding. See Note 13. Stockholders’ Equity for additional information regarding the Stock Repurchase Program.
As part of a certain sale of forestry land in 2014, we generated significant tax gains. The installment note’s structure allowed us to defer the resulting federal and state tax liability of $45.6 million until 2029, the maturity date for the installment note. We have a deferred tax liability related to the gain in connection with the sale. At the maturity date of the installment note in 2029, the $200.0 million time deposit included in investments held by special purpose entities will be used to pay the $180.0 million of principal for the Senior Notes held by special purpose entity and the remaining $20.0 million will become available to us, which can be used to pay a portion of the tax liability. See Note 5. Financial Instruments and Fair Value Measurements for additional information.
As of March 31, 2025 and December 31, 2024, we were required to provide surety bonds that guarantee completion and maintenance of certain infrastructure in certain development projects and mitigation banks, as well as other financial guarantees of $46.7 million and $53.1 million, respectively, as well as standby letters of credit in the amount of $0.2 million and $0.7 million, respectively, which may potentially result in a liability to us if certain obligations are not met.
In conducting our operations, we routinely hold customers’ assets in escrow pending completion of real estate transactions, and are responsible for the proper disposition of these balances for our customers. These amounts are maintained in segregated bank accounts and have not been included in the accompanying condensed consolidated balance sheets, consistent with GAAP and industry practice. The cash deposit accounts and offsetting liability balances for escrow deposits in connection with our title insurance agencies for real estate transactions were $7.0 million and $6.4 million as of March 31, 2025 and December 31, 2024, respectively. These escrow funds are not available for regular operations.
Summary of Cash Flows
A summary of our cash flows from operating, investing and financing activities are as follows:
29.0
27.6
(6.6)
(14.7)
(17.1)
(9.5)
96.3
90.8
101.6
Cash Flows from Operating Activities
Net cash flows provided by operating activities include net income, adjustments for non-cash items, distribution of earnings from unconsolidated joint ventures, changes in operating assets and liabilities and expenditures related to assets ultimately planned to be sold, including developed and undeveloped land. Adjustments for non-cash items primarily include depreciation, depletion and amortization, equity in income from unconsolidated joint ventures, deferred income tax and cost of real estate sold. Net cash provided by operations was $29.0 million during the three months ended March 31, 2025, as compared to $27.6 million during the same period in 2024. Net income was $16.7 million during the three months ended March 31, 2025, as compared to $13.1 million during the same period in 2024. The increase in net cash provided by operating activities was primarily due to the changes in net income, distribution of earnings from unconsolidated joint ventures, cost of real estate sold, other assets and accounts payable and other liabilities, partially offset by the changes in equity in income from unconsolidated joint ventures, deferred income tax and expenditures for and acquisition of real estate to be sold during the period.
Cash Flows from Investing Activities
Net cash flows used in investing activities primarily include capital expenditures for operating property and property and equipment used in our operations and capital contributions to unconsolidated joint ventures, partially offset by maturities of assets held by SPEs. During the three months ended March 31, 2025, net cash used in investing activities was $6.6 million, which included capital expenditures for operating property and property and equipment of $5.6 million and capital contributions to unconsolidated joint ventures of $1.5 million, partially offset by maturities of assets held by SPEs of $0.4 million and proceeds from the disposition of assets of $0.1 million. During the three months ended March 31, 2024, net cash used in investing activities was $14.7 million, which included capital expenditures for operating property and property and equipment of $14.3 million and capital contributions to unconsolidated joint ventures of $1.2 million, partially offset by maturities of assets held by SPEs of $0.4 million, proceeds from insurance claims of $0.2 million, proceeds from the disposition of assets of $0.1 million and capital distributions from unconsolidated joint ventures of $0.1 million.
Cash Flows from Financing Activities
Net cash used in financing activities during the three months ended March 31, 2025 was $17.1 million, compared to $9.5 million during the same period in 2024. Net cash used in financing activities during the three months ended March 31, 2025, included principal payments for debt of $30.4 million, dividends paid of $8.2 million, repurchase of common stock of $5.7 million, capital distributions to non-controlling interest of $0.3 million and debt issuance costs of $0.3 million, partially offset by borrowings on debt of $27.8 million. Net cash used in financing activities during the three months ended March 31, 2024, included dividends paid of $7.0 million, principal payments for debt of $2.3 million, capital distributions to non-controlling interest of $0.2 million and principal payments for finance leases of less than $0.1 million, partially offset by borrowings on debt of $0.1 million.
Contractual Obligations
There were no material changes outside the ordinary course of our business in our contractual obligations during the first quarter of 2025.
Forward-Looking Statements
This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These statements include, among other things, information about possible or assumed future results of the business and our financial condition, liquidity, results of operations, plans, strategies, prospects and objectives. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar expressions concerning matters that are not historical facts.
66
We caution you that all forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or events may differ materially from those indicated as a result of various important factors, including: our ability to successfully implement our strategic objectives; new or increased competition across our business units; any decline in general economic conditions, particularly in our primary markets; interest rate fluctuations; inflation; financial institution disruptions; supply chain disruptions; geopolitical conflicts and political uncertainty and the corresponding impact on the global economy; the imposition of tariffs; our ability to successfully execute or integrate new business endeavors and acquisitions; our ability to yield anticipated returns from our developments and projects; our ability to effectively manage our real estate assets, as well as the ability for us or our JV partners to effectively manage the day-to-day activities of our JV projects; our ability to complete construction and development projects within expected timeframes; the interest of prospective guests in our hotels, including the new hotels we have opened since the beginning of 2023; reductions in travel and other risks inherent to the hospitality industry; the illiquidity of all real estate assets; financial risks, including risks relating to currency fluctuations, credit risks, and fluctuations in the market value of our investment portfolio; any potential negative impact of our longer-term property development strategy, including losses and negative cash flows for an extended period of time if we continue with the self-development of granted entitlements; our dependence on homebuilders; mix of sales from different communities and the corresponding impact on sales period over period; the financial condition of our commercial tenants; regulatory and insurance risks associated with our senior living facilities; public health emergencies; any reduction in the supply of mortgage loans or tightening of credit markets; our dependence on strong migration and population expansion in our regions of development, particularly Northwest Florida; our ability to fully recover from natural disasters and severe weather conditions; the actual or perceived threat of climate change; the seasonality of our business; our ability to obtain adequate insurance for our properties or rising insurance costs; our dependence on certain third party providers; the inability of minority shareholders to influence corporate matters, due to concentrated ownership of largest shareholder; the impact of unfavorable legal proceedings or government investigations; the impact of complex and changing laws and regulations in the areas we operate; changes in tax rates, the adoption of new U.S. tax legislation, and exposure to additional tax liabilities, including with respect to Qualified Opportunity Zone program; new litigation; our ability to attract and retain qualified employees, particularly in our hospitality business; our ability to protect our information technology infrastructure and defend against cyber-attacks; increased media, political, and regulatory scrutiny negatively impacting our reputation; our ability to maintain adequate internal controls; risks associated with our financing arrangements, including our compliance with certain restrictions and limitations; our ability to pay our quarterly dividend; the potential volatility of our common stock; and the other risks and uncertainties discussed in “Risk Factors” beginning on page 7 of our most recent Annual Report on Form 10-K and from time to time in our subsequent filings with the SEC. We assume no obligation to revise or publicly released any revision to any forward-looking statements contained in this Quarterly Report on Form 10-Q unless required by law.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to market risks primarily from interest rate risk fluctuations. We have investments in short-term U.S. Treasury Bills classified as cash equivalents that have fixed interest rates for which changes in interest rates generally affect the fair value of the investment, but not the earnings or cash flows. A hypothetical 100 basis point increase in interest rates would result in a decrease of less than $0.1 million in the market value of these investments as of March 31, 2025. Any realized gain or loss resulting from such interest rate changes would only occur if we sold the investments prior to maturity or if a decline in their value is determined to be related to credit loss.
We have historically been exposed, and in the future may again be exposed, to credit risk associated with investments classified as available-for-sale securities (“Securities”) and these instruments are subject to price fluctuations as a result of changes in the financial market’s assessment of issuer credit quality, increases in delinquency and default rates, changes in prevailing interest rates and other economic factors. A downgrade of the U.S. government’s credit rating may also decrease the value of Securities.
Some of our cash and cash equivalents are invested in money market instruments. Changes in interest rates related to these investments would not significantly impact our results of operations.
We are subject to interest rate risk on our variable-rate debt and utilize derivative financial instruments to reduce our exposure to market risks from changes in interest rates on certain loans. We have entered into interest rate swap
agreements designated as cash flow hedges to manage the interest rate risk associated with some of our variable rate debt, with changes in the fair value recorded to accumulated other comprehensive income. As of March 31, 2025, we had variable-rate debt outstanding totaling $155.7 million, of which $40.5 million was swapped to a fixed interest rate. As of March 31, 2025, the weighted average interest rate on our variable rate loans, excluding the swapped portion, based on SOFR was 6.5%. Based on the outstanding balance of these loans as of March 31, 2025, a hypothetical 100 basis point increase in the applicable rate would result in an increase to our annual interest expense of $1.2 million. See Note 5. Financial Instruments and Fair Value Measurements and Note 8. Debt, Net for additional information.
Evaluation of Disclosure Controls and Procedures. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting. During the quarter ended March 31, 2025, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
We are subject to a variety of litigation, claims, other disputes and governmental proceedings that arise from time to time in the ordinary course of our business, none of which we believe will have a material adverse effect on our consolidated financial position, results of operations or liquidity. In addition, we are subject to environmental laws and regulations, which include obligations to remove or limit the effects on the environment of the disposal or release of certain wastes or substances at various sites, including sites which have been previously sold. See Note 17. Commitments and Contingencies, for additional information.
A description of the risk factors associated with our business is contained in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. There have been no material changes to our Risk Factors as previously reported.
Our Board has approved the Stock Repurchase Program pursuant to which we are authorized to repurchase shares of our common stock. The program has no expiration date. In February 2025, the Board increased the total authorization under the Stock Repurchase Program to $100.0 million. As of March 31, 2025, we had a total authority of $94.3 million available for purchase of shares of our common stock outstanding. We may repurchase our common stock in open market purchases from time to time, in privately negotiated transactions or otherwise, pursuant to Rule 10b-18 under the Exchange Act. The timing and amount of any additional stock to be repurchased will depend upon a variety of factors. Repurchases may be commenced or suspended at any time or from time to time without prior notice. The program will continue until otherwise modified or terminated by our Board at any time in its sole discretion.
The following table provides information on our repurchase of common stock during the three months ended March 31, 2025:
Total Number of Shares
Maximum Dollar Value of
Purchased as Part of
Stock that May Yet Be
Total Number of
Average Price
Publicly Announced
Purchased Under the
Period
Shares Purchased
Paid per Share (a)
Plans or Programs
January 1-31, 2025
February 1-28, 2025
March 1-31, 2025
123,614
45.99
94.3
Item 3. Defaults upon Senior Securities
None.
Not applicable.
During the three months ended March 31, 2025, none of our directors or executive officers adopted, modified or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement”.
Index to Exhibits
Exhibit
Number
Restated and Amended Articles of Incorporation of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010).
Second Amended and Restated Bylaws of the registrant (incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on November 15, 2022).
*31.1
Certification of Principal Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2
Certification of Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002.
**32.1
Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**32.2
Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*101.INS
Inline XBRL Instance Document.
*101.SCH
Inline XBRL Taxonomy Extension Schema Document.
*101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
*101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
*101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
*101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Filed herewith.
** Furnished herewith.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
Date:
April 23, 2025
/s/ Jorge L. Gonzalez
Jorge L. Gonzalez
President, Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)
/s/ Marek Bakun
Marek Bakun
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)