THE ST. JOE COMPANY 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 in this discussion 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" on page 4 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 OverviewSt. Joe is a real estate development, asset management and operating company with real estate assets and operations inNorthwest 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. We may partner with or explore the sale of discrete assets when we and/or others can better deploy resources. We seek to enhance the value of our owned real estate assets by developing residential, commercial and hospitality projects to meet market demand. Approximately 86% of our real estate is located inFlorida's Bay ,Gulf , andWalton counties. Approximately 90% of our real estate land holdings are located within fifteen miles of theGulf 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 focus on our core business activity of real estate development, asset management and operations. We are developing 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. 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 expected return over its life.
COVID-19 Pandemic Update
The economic conditions inthe United States have been and continue to be negatively impacted by the ongoing COVID-19 pandemic, which has resulted in among other things, quarantines, "stay-at-home" orders and similar mandates for many individuals to substantially restrict daily activities and for many businesses to close or significantly reduce normal operations, and we expect these negative impacts to continue. Beginning inmid-March 2020 , in response to federal, state and local orders and guidelines, we took a number of protective measures, including temporarily closing theWaterColor Inn ,WaterSound Inn andThe Pearl Hotel for overnight guests, closing retail outlets and beach clubs, closing or limiting restaurant activities at our food and beverage operations to pick up only (and in certain locations, local delivery), implementing cost reduction measures and "work from home" policies. Our hospitality assets gradually reopened inMay 2020 , but could be ordered to close again. While the breadth and duration of the COVID-19 pandemic impact is still unknown, we could experience material declines within each of our reportable segments in one or more periods in 2021 and beyond compared to the historical norms. We will continue to monitor the potential impacts and evaluate each new project day by day and phase by phase and take prudent measures and respond as needed based on market conditions. 42 Table of Contents 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:
Three Months Ended March 31,
2021 2020
Segment Operating Revenue
Residential 50.0 % 16.4 %
Hospitality 31.5 % 35.3 %
Commercial 17.4 % 47.9 %
Other 1.1 % 0.4 %
Consolidated operating revenue 100.0 % 100.0 %
For more information regarding our reportable segments, see Note 17. Segment
Information of our condensed consolidated financial statements included inthis quarterly report. Residential Segment Our residential real estate 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 real estate segment also evaluates opportunities to enter into JV agreements for specific communities such as Latitude Margaritaville Watersound. Watersound Origins,Watersound Camp Creek ,Breakfast Point ,Titus Park ,College Station ,Park Place , WindMark Beach and SouthWood are large scale, multi-phase communities with current sales activity and future phases. Homesites in these communities are developed based on market demand and sold primarily to homebuilders and retail customers on a limited basis. SummerCamp Beach and RiverCamps have homesites available for sale or lands for future development. WaterColor and Wild Heron are substantially developed, with remaining homesites in these communities available for sale. The Latitude Margaritaville Watersound community is a planned 55+ active adult residential community under development inBay County, Florida . The community is located near theIntracoastal Waterway with convenient access to theNorthwest Florida Beaches International Airport . The community is being developed through an unconsolidated JV with our partnerMinto Communities USA , a homebuilder and community developer, and is estimated to include approximately 3,500 residential homes, which will be developed in smaller increments of discrete neighborhoods. Construction of the sales center and 13 model homes was completed inApril 2021 . In addition, homesite infrastructure for the initial neighborhoods is underway, with site development of 616 homesites.
Planned residential projects of
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The residential homesite pipeline by community/project is as follows:
Residential Homesite Pipeline (a)
Additional
Platted or Engineering or Entitlements with
Community/Project Location Under Development Permitting Concept Plan Total
Breakfast Point (b) Bay County, FL - 235 1,445 1,680
College Station Bay County, FL 89 44 274 407
East Lake Powell (c) Bay County, FL - - 360 360
Latitude Margaritaville
Watersound (d) (e) Bay County, FL 629 - 2,871 3,500
Mexico Beach (b) Bay County, FL - 32 453 485
Mexico Beach Townhomes (b) Bay County, FL - 42 78 120
Park Place Bay County, FL 72 101 211 384
RiverCamps (c) Bay County, FL 81 - 149 230
SouthWood (f) Leon County, FL 51 172 1,020 1,243
SummerCamp Beach (b) Franklin County, FL 90 - 271 361
Titus Park Bay County, FL 22 357 740 1,119
Watersound (d) Walton County, FL - 115 5,781 5,896
Watersound Camp Creek (f) Walton County, FL 82 157 - 239
Watersound Origins (f) Walton County, FL 194 170 115 479
Watersound Origins Townhomes (f) Walton County, FL 64 - - 64
Ward Creek (d) Bay County, FL - 593 1,007 1,600
WaterColor Park District Walton County, FL 15 - - 15
Wild Heron Bay County, FL 36 - - 36
WindMark Beach (f) Gulf County, FL 105 210 966 1,281
Total Homesites 1,530 2,228 15,741 19,499
The number of homesites are preliminary and are subject to change. Includes (a) homesites platted or currently in concept planning, engineering, permitting
or development. We have significant additional entitlements for future
residential homesites on our land holdings.
(b)
(c) Development Agreement ("DA").
(d) Detailed Specific Area Plan ("DSAP").
(e) The unconsolidated Latitude Margaritaville Watersound JV plans to build and
sell homes in this community.
(f) Development of Regional Impact ("DRI").
As ofMarch 31, 2021 , we had 1,268 residential homesites under contract with 11 different local, regional and national homebuilders, which are expected to result in revenue of approximately$114.0 million at closing of the homesites, which are expected over the next several years. As ofMarch 31, 2020 , we had 979 residential homesites under contract, which are expected to result in revenue of approximately$91.0 million ($26.8 million has been realized throughMarch 31, 2021 ). The increase in homesites under contract is due to the development of additional homesites and increased homebuilder contracts for residential homesites. The number of homesites under contract are subject to change based on homesite closings and homebuilder interest in each community.
Hospitality Segment
Our hospitality segment features a private membership club, ("Watersound Club ",
formerly referred to as The Clubs by JOE), hotel operations, food and beverage
operations, golf courses, beach clubs, retail outlets, gulf-front vacation
rentals, management services, marinas and other entertainment assets. The
hospitality segment generates revenue and incurs costs from membership sales,
membership reservations, golf courses, the WaterColor Inn and WaterSound Inn ,
short-term vacation rentals, management of The Pearl Hotel , food and beverage
operations, merchandise sales, marina operations, charter flights, other resort
and entertainment activities and beach clubs, which includes operation 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, management
fees and other membership fees. From time to time, we may explore the sale of
certain hospitality properties, the development of new
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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 10. Debt, Net.
Watersound Club provides club members and guests in some of our hotels access to our member facilities, which include theCamp Creek golf course, Shark's Tooth golf course,Watersound Beach Club and our Pilatus PC-12 NG aircraft ("N850J").Watersound Club offers different types of club memberships, each with different access rights and associated fee structures.Watersound Club is focused on creating a world class membership experience combined with the luxurious aspects of a destination resort. Club operations include our golf courses, beach club and facilities that generate revenue from membership sales, membership reservations, daily play at the golf courses, merchandise sales, charter flights and food and beverage sales and incur expenses from the services provided, maintenance of the golf courses, aircraft, beach club and facilities and personnel costs. Watersound Origins includes a six-hole golf course, resort-style pool, fitness center, two tennis courts and private lake dock located in the community. Access to amenities are reserved to Watersound Origins members consisting of the community residents. The golf course is available for public play.Watersound Club has a private beach club located in Watersound,Florida , which includes over one mile ofGulf of Mexico frontage, two resort-style pools, two restaurants, three bars, kid's room and a recreation area. Shark's Tooth includes an 18-hole golf course, a full club house, a pro shop, as well as two food and beverage operations. In addition to the golf course,Watersound Club's tennis center is located in the Wild Heron community near the Shark's Tooth golf course.Camp Creek is an 18-hole golf course located in Watersound,Florida . In the fourth quarter of 2019, we commenced construction on new club amenities adjacent to theCamp Creek golf course. Amenities are planned to include a health and wellness center, restaurants, a tennis center, pickle ball courts, a resort-style pool complex with separate adult pool, a golf teaching academy, pro shop and multi-sport fields. Once complete, these amenities will be available toWatersound Club members and guests at some of our hotels.Watersound Club also offers members private air charter flights through our N850J aircraft. We own and operate the award-winningWaterColor Inn (which includes the FOOW restaurant), theWaterSound Inn and two gulf-front vacation rental houses. We own and operate retail and commercial outlets near our hospitality facilities. We also operate the award-winningThe Pearl Hotel andHavana Beach Bar & Grill restaurant and theWaterColor Beach Club , which includes food and beverage operations and other hospitality related activities, such as beach chair rentals. Revenue is generated from (i) theWaterColor Inn ,WaterSound Inn and operation of theWaterColor Beach Club , (ii) management ofThe Pearl Hotel , (iii) short-term vacation rentals, (iv) food and beverage operations and (v) merchandise sales.The WaterColor Inn ,WaterSound Inn and operation of theWaterColor Beach Club generate revenue from service and/or daily rental fees and incur expenses from the cost of services and goods provided, maintenance of the facilities and personnel costs. Revenue generated from our management services include management fees. Management services expenses consist primarily of internal administrative costs. Hotel operations and short-term vacation rentals generate revenue from rental fees and incur expenses from the holding cost of assets we own and standard lodging personnel, such as front desk, reservations and marketing personnel. Our food and beverage operations generate revenue from food and beverage sales and incur expenses from the cost of services and goods provided and standard personnel costs. Our retail outlets generate revenue from merchandise sales, which are recognized at the point of sale and incur expenses from the cost of goods provided, personnel costs and facility costs. We are in the process of constructing anEmbassy Suites hotel, with our JV partner, in thePier Park area ofPanama City Beach, Florida ; an upscale boutique inn located adjacent to theCamp Creek golf course near the highly desirableScenic Highway 30A corridor; aHilton Garden Inn nearNorthwest Florida Beaches International Airport ; a HomeWood Suites by Hilton adjacent to the newPanama City Beach Sports Complex inPanama City Beach, Florida ; and The Lodge 30A, with our JV partner, a boutique hotel onScenic Highway 30A in Seagrove Beach,Florida . In the third quarter of 2020 we executed a long-term land lease to develop, construct and operate a new waterfrontHotel Indigo and standalone restaurant inPanama City, Florida's downtown waterfront district. Construction is expected to begin in the second quarter of 2021. Once complete, we will manage the day-to-day operations of all planned hotels and restaurants. 45 Table of Contents
Our hotel portfolio by property is as follows:
Rooms (a)
Location Completed Planned Total
Operational
WaterColor Inn Walton County, FL 60 - 60
WaterSound Inn Walton County, FL 11 - 11
TownePlace Suites by Marriott Panama City Beach Pier Park (b) Bay County, FL 124 - 124
Total operational rooms 195 - 195
Managed
The Pearl Hotel (c) Walton County, FL 55 - 55
Total managed rooms 55 - 55
Under Development /Construction
Embassy Suites by Hilton Panama City Beach (d) Bay County, FL - 255 255
Hilton Garden Inn Panama City Airport Bay County, FL - 143 143
HomeWood Suites by Hilton Panama City Beach Bay County,FL - 131 131 The Lodge 30A (d) Walton County, FL - 85 85 Camp Creek Inn Walton County, FL - 75 75
Total rooms under development/construction
- 689 689
Total rooms 250 689 939
Includes hotels currently in operation, under management or under development (a) and construction. We have significant additional entitlements for future
hotel projects on our land holdings.
The hotel is operated by our JV partner and opened in
accounting, which is included within our Commercial segment.
(c) The hotel is owned by a third party, but is operated by us.
(d) Under development with our JV partner.
We own and operate two marinas consisting of theBay Point Marina andPort St. Joe Marina . We are planning new marinas along theIntracoastal Waterway . Our marinas generate revenue from boat slip rentals and fuel sales, and incur expenses from cost of services provided, maintenance of the marina facilities and personnel costs. At present, we are reconstructing the marinas and expect a portion to be open by the end of 2021. See Note 7. Hurricane Michael for additional information. We own and operate the WaterColor retail store that generates revenue from merchandise sales, which are recognized at the point of sale, and incur expenses from the cost of goods provided, personnel costs and facility costs. We own and operateThe Powder Room Shooting Range and Training Center ("The Powder Room ") inPanama City Beach, Florida . The approximately 17,000 square feet facility was completed inDecember 2020 and includes a retail store with firearms and ammunition, as well as training and educational space and 14 shooting lanes.The Powder Room generates revenue from service fees and merchandise sales, which are recognized at the point of sale, and incurs expenses from the cost of services and goods provided, personnel costs and facility costs.
Commercial Segment
Our commercial segment includes leasing of commercial property, multi-family, a senior living community and other assets. The commercial segment also oversees the planning, development, entitlement, management and sale of our commercial and rural 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 inNorthwest Florida . We own and manage retail shopping centers and develop commercial parcels. We have large land holdings near thePier Park retail center, adjacent to theNorthwest Florida Beaches International Airport , near or within business districts in the region and along major roadways. We also lease land for hunting, rock quarrying and other uses. The commercial segment also manages our timber holdings inNorthwest Florida which includes growing and selling pulpwood, sawtimber and other products, such as fill dirt. 46
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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 also 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 the loans as described in Note 10. Debt, Net. The commercial segment's portfolio of leasable properties continues to expand and diversify. Through wholly-owned subsidiaries and consolidated and unconsolidated joint ventures we are in the process of constructing 703 apartment units, in addition to the 414 apartment units and 107 senior living units that have recently been completed. Pier Park Crossings, which was developed in two phases, includes 360 completed apartment units inPanama City Beach, Florida . In addition toPier Park Crossings, we have three apartment communities under development or construction. Watersound Origins Crossings, planned for 217 units, with 54 units completed as ofMarch 31, 2021 , is adjacent to theWatersound Town Center in Watersound,Florida . Sea Sound apartments, an unconsolidated JV planned for 300 units, is located inPanama City Beach, Florida near theBreakfast Point residential community.Star Avenue apartments, planned for 240 units, is located inPanama City, Florida . We are planning additional apartment communities. Our leasing portfolio consists of approximately 907,000 square feet of leasable space for mixed-use, retail, industrial, office and medical uses. Within the leasing portfolio, our mixed-use lease space totals approximately 133,000 square feet. It consists primarily ofWaterColor Town Center ,WindMark Beach Town Center , WaterSound Gatehouse, WaterColor Crossings and various flex-space buildings. Our retail lease space totals approximately 352,000 square feet. It consists primarily of Pier Park North JV and other leasable properties. Our industrial lease space totals approximately 304,000 square feet, primarily located at VentureCrossings. Our office lease space consists of approximately 96,000 square feet, primarily located in theBeckrich Office Park inPanama City Beach, Florida . Our medical lease space consists of approximately 22,000 square feet. It consists of a medical clinic at theWatersound Town Center and medical space atBeckrich Office Park . Through separate unconsolidated JVs, other commercial properties include a 124 room TownePlace Suites by Marriott operated by our JV partner inPanama City Beach, Florida and aBusy Bee branded fuel station and convenience store operated by our JV partner inPanama City Beach, Florida . We have other commercial projects in the planning, engineering or construction stages. This includes aPublix supermarket totaling approximately 50,000 square feet, a self-storage facility totaling approximately 71,000 square feet and a new multi-tenant commercial building in theWatersound Town Center totaling approximately 20,000 square feet. In addition to the properties listed above, we have a number of projects in various stages of planning, including additional commercial buildings, apartment communities and an additional senior living community.
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
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Form 10-K for the year ended
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. Hospitality revenues have historically been lower in the first quarter and are normally higher in the second and third quarters and may vary with the timing of holidays and extraordinary events such as the COVID-19 pandemic. Homesites sell in sporadic transactions in various communities that may impact quarterly results. Commercial sales may vary from period to period.
Results of Operations
Consolidated Results
The following table sets forth a comparison of the results of our operations:
Three Months Ended
March 31,
2021 2020
In millions
Revenue:
Real estate revenue $ 21.0 $ 5.8
Hospitality revenue 13.1 6.6
Leasing revenue 5.6 4.3
Timber revenue 1.6 1.9
Total revenue 41.3 18.6
Expenses:
Cost of real estate revenue 10.5 1.8
Cost of hospitality revenue 11.5 7.3
Cost of leasing revenue 2.7 0.6
Cost of timber revenue 0.1 0.2Other operating and corporate expenses 7.1
6.9
Depreciation, depletion and amortization 3.9
3.1
Total expenses 35.8
19.9
Operating income (loss) 5.5
(1.3)
Other income (expense): Investment income (loss), net 1.2
(1.6)
Interest expense (3.6)
(3.3)
Gain on contribution to equity method investment 0.1
4.3
Other income, net 1.3 0.2
Total other expense, net (1.0) (0.4)
Income (loss) before equity in loss from
unconsolidated affiliates and income taxes 4.5 (1.7)
Equity in loss from unconsolidated affiliates (0.5)
(0.1)
Income tax (expense) benefit (1.0)
0.5
Net income (loss) $ 3.0 $ (1.3)
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Real Estate Revenue and Gross Profit
The following table sets forth a comparison of our total real estate revenue and
gross profit:
Three Months Ended March 31,
2021 % (a) 2020 % (a)
Dollars in millions
Revenue:Residential real estate revenue$ 20.5 97.6 %$ 2.9 50.0 % Commercial and rural real estate revenue - - % 2.8
48.3 % Other revenue 0.5 2.4 % 0.1 1.7 % Real estate revenue$ 21.0 100.0 %$ 5.8 100.0 % Gross profit: Residential real estate$ 10.3 50.2 %$ 1.8 62.1 %
Commercial and rural real estate - - % 2.1
75.0 % Other 0.2 40.0 % 0.1 100.0 % Gross profit$ 10.5 50.0 %$ 4.0 69.0 %
(a) Calculated percentage of total real estate revenue and the respective gross
margin percentage.
Residential Real Estate Revenue and Gross Profit. During the three months ended
March 31, 2021 , residential real estate revenue increased $17.6 million to $20.5
million , as compared to $2.9 million during the same period in 2020. During the
three months ended March 31, 2021 , residential real estate gross profit
increased $8.5 million to $10.3 (or gross margin of 50.2%), as compared to $1.8
million (or gross margin of 62.1%) during the same period in 2020. During the
three months ended March 31, 2021 , we sold 203 homesites and two homes and had
unimproved residential land sales of $0.1 million , compared to 19 homesites and
no homes sold during the same period in 2020. During the three months ended
March 31, 2021 and 2020, the average revenue, excluding homesite residuals, per
homesite sold was approximately $73,000 and $113,000 , respectively, due to the
mix of sales from different communities, which included the sale of 55
undeveloped homesites within the SouthWood community during the current period.
The revenue and gross profit for each period was impacted by the volume of sales
within each of the communities, the difference in pricing among the communities
and the difference in the cost of the homesite development. The number of
homesites sold varied each period due to the timing of homebuilder contractual
closing obligations and the timing of development of completed homesites in our
residential communities.
Commercial and Rural Real Estate Revenue and Gross Profit. During the three
months ended March 31, 2021 , we had one commercial and rural real estate sale
totaling approximately one acre for less than $0.1 million . During the three
months ended March 31, 2020 , we had five commercial and rural real estate sales
totaling approximately 80 acres for $2.8 million , resulting in a gross profit
margin of approximately 75.0%. Revenue from commercial and rural 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 and other commercial uses.
Our gross margin can vary significantly from period to period depending on the
characteristics of property sold. Sales of rural and timber 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 spent on the property.
Other Revenue. Other revenue primarily consists of mitigation bank credit sales and title fee revenue.
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Hospitality Revenue and Gross Profit
Three Months Ended March 31,
2021 2020
In millions
Hospitality revenue $ 13.1 $ 6.6
Gross profit (deficit) $ 1.6 $ (0.7)
Gross margin 12.2 % (10.6) %
Hospitality revenue increased $6.5 million , or 98.5%, to $13.1 million during
the three months ended March 31, 2021 , as compared to $6.6 million in the same
period in 2020. During the three months ended March 31, 2021 the increase in
hospitality revenue was primarily related to higher demand in lodging and resort
amenities due to increased popularity of the region and year-round travel that
resulted in an influx of members and guests from new markets. The increase was
also due to the impact of the COVID-19 pandemic on the prior period, which
resulted in shut downs and reduced revenue beginning in mid-March 2020 . As of
March 31, 2021 , Watersound Club had 1,722 members, compared with 1,284 members
as of March 31, 2020 , an increase of 438 members. Our hospitality gross margin
increased to 12.2% during the three months ended March 31, 2021 compared to a
negative gross margin of 10.6% during the same period in 2020. The increase in
gross margin is due to an increase in year-round travel in the current period
consistent with the growth and popularity of the region, as well as management
of expenses and labor.
Leasing Revenue and Gross Profit
Three Months Ended March 31,
2021 2020
In millions
Leasing revenue $ 5.6 $ 4.3
Gross profit $ 2.9 $ 3.7
Gross margin 51.8 % 86.0 %
Leasing revenue increased $1.3 million , or 30.2%, to $5.6 million during the
three months ended March 31, 2021 , as compared to $4.3 million in the same
period in 2020. The increase is primarily due to new leases at Pier Park
Crossings Phase II apartments, which began leasing in the fourth quarter of 2020
and new leases at Watersound Origins Crossings apartments and Watercrest senior
living community, which began leasing in the first quarter of 2021, as well as
other new leases. Leasing gross margin decreased during the three months ended
March 31, 2021 to 51.8%, as compared to 86.0% during the same period in 2020,
primarily due to $0.7 million of business interruption proceeds received for
Pier Park Crossings apartments related to Hurricane Michael in the prior period
and start-up expenses for new assets in the current period.
Timber Revenue and Gross Profit
Three Months Ended March 31,
2021 2020
In millions
Timber revenue $ 1.6 $ 1.9
Gross profit $ 1.5 $ 1.7
Gross margin 93.8 % 89.5 %
Timber revenue decreased$0.3 million , or 15.8%, to$1.6 million during the three months endedMarch 31, 2021 , as compared to$1.9 million in the same period in 2020. The decrease is primarily due to a decrease in the sales of fill dirt and other products. There were 76,000 tons of wood products sold during the three months endedMarch 31, 2021 , as compared to 86,000 tons of wood products sold during the same period in 2020. The decrease in the amount of wood product tons sold were offset by price increases in the current period. Gross margin increased during the three months endedMarch 31, 2021 to 93.8%, as compared to 89.5% during the same period in 2020, primarily due to increased prices and
changes in product mix.
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Other Operating and Corporate Expenses
Three Months Ended March 31,
2021 2020
In millions
Employee costs $ 2.6 $ 2.4
401(k) contribution 1.2 1.2Property taxes and insurance 1.4
1.2
Professional fees 0.8
1.2
Marketing and owner association costs 0.7
0.3
Occupancy, repairs and maintenance 0.1
0.2
Other miscellaneous 0.3
0.4
Total other operating and corporate expenses $ 7.1 $
6.9
Other operating and corporate expenses for the three months ended
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization expense increased$0.8 million during the three months endedMarch 31, 2021 , as compared to the same period in 2020, primarily due to new assets placed in service.
Investment Income (Loss), Net
Investment income (loss), net primarily includes (i) interest and dividends
earned, (ii) net unrealized gain or loss related to investments - equity
securities, (iii) interest income earned on the time deposit held by SPE and
(iv) interest earned on mortgage notes receivable and other receivables as
detailed in the table below:
Three Months Ended March 31,
2021 2020
In millions
Interest and dividend income $ - $ 1.1
Unrealized loss on investments, net (1.0) (4.8)
Interest income from investments in special purpose entities 2.0 2.0
Interest earned on notes receivable and other interest 0.2 0.1
Total investment income (loss), net $ 1.2 $ (1.6)
Investment income, net increased$2.8 million to$1.2 million for the three months endedMarch 31, 2021 , as compared to investment loss of$1.6 million for the three months endedMarch 31, 2020 . The three months endedMarch 31, 2021 had interest and dividend income of less than$0.1 million , compared to interest and dividend income of$1.1 million during the prior period. The decrease in interest and dividend income for the three months endedMarch 31, 2021 , as compared to the same period in 2020, is primarily due to the change in investments held during the period and lower interest rates. The three months endedMarch 31, 2021 includes unrealized losses related to preferred stock of$1.0 million , compared to$4.8 million during the prior period. 51 Table of Contents Interest Expense
Interest expense primarily includes interest incurred on the Senior Notes issued
by
Three Months Ended March 31,
2021 2020
In millions
Interest expense and amortization of discount and issuance
costs for Senior Notes issued by special purpose entity $ 2.2 $ 2.2
Other interest expense 1.4 1.1
Total interest expense $ 3.6 $ 3.3
Interest expense increased $0.3 million , or 9.1%, to $3.6 million during the
three months ended March 31, 2021 , as compared to $3.3 million in the same
period in 2020. The increase in interest expense is primarily related to the
increase in project financing. See Note 10. Debt, Net for additional information
regarding project financing.
Gain on Contribution to
Gain on contribution to equity method investment during the three months endedMarch 31, 2021 and 2020 was$0.1 million and$4.3 million , respectively. Gain on contribution to equity method investment for the three months endedMarch 31, 2021 includes a gain of$0.1 million on additional infrastructure improvements contributed to our unconsolidated Latitude Margaritaville Watersound JV. Gain on contribution to equity method investment for the three months endedMarch 31, 2020 includes a gain of$4.3 million on land and mitigation credits contributed to our unconsolidated Sea Sound Apartments JV. See Note 4. Joint Ventures for additional information. Other Income, Net
Other income, net primarily includes income from our retained interest investments, gain on insurance recovery, loss from hurricane damage and other income and expense items as detailed in the table below:
Three Months Ended March 31,
2021 2020
In millionsAccretion income from retained interest investments$ 0.3
$ 0.3
Gain on insurance recovery 0.9 -
Loss from hurricane damage - (0.1)
Miscellaneous income, net 0.1 -
Other income, net $ 1.3 $ 0.2
Other income, net increased $1.1 million to $1.3 million during the three months
ended March 31, 2021 , as compared to $0.2 million in the same period in 2020.
The three months ended March 31, 2021 , includes gain on insurance recovery of
$0.9 million related to Hurricane Michael. The three months ended March 31, 2020
did not have any gain on insurance recovery, but includes $0.1 million of loss
from hurricane damage related to Hurricane Michael. See Note 7. Hurricane
Michael for additional information.
Income Tax (Expense) Benefit
We recorded income tax expense of$1.0 million during the three months endedMarch 31, 2021 , as compared to income tax benefit of$0.5 million during the same period in 2020. Our effective tax rate was 24.8% for the three months endedMarch 31, 2021 , as compared to 24.4% during the same period in 2020. Our effective rate for the three months endedMarch 31, 2021 and 2020 differed from the federal statutory rate of 21.0% primarily due to state income taxes and other permanent differences. 52 Table of Contents Segment Results Residential The table below sets forth the results of operations of our residential segment: Three Months Ended March 31, 2021 2020 In millions Revenue: Real estate revenue $ 18.8 $ 2.4 Hospitality revenue 0.1 0.1 Leasing revenue 0.1 - Other revenue 1.7 0.5 Total revenue 20.7 3.0 Expenses:
Cost of real estate and other revenue 10.3
1.1
Cost of hospitality revenue 0.2 0.1
Other operating expenses 1.6 1.2Depreciation and amortization 0.1
0.1
Total expenses 12.2 2.5
Operating income 8.5 0.5
Other income (expense):
Investment income, net 0.2 0.1
Interest expense (0.2) (0.2)Gain on contribution to equity method investment 0.1 - Total other income (expense), net 0.1 (0.1) Income before equity in loss from unconsolidated affiliates and income taxes $ 8.6 $ 0.4 Real estate revenue includes 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. Hospitality revenue includes some of our short-term vacation rentals. Other revenue includes tap and impact fee credits sold and marketing fees. 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. For the three months endedMarch 31, 2021 real estate revenue includes estimated homesite residuals of$1.1 million and other revenue includes estimated fees related to homebuilder homesite sales of$0.6 million . For the three months endedMarch 31, 2020 , real estate revenue did not include any estimated homesite residuals and other revenue did not include any estimated fees related to homebuilder homesite sales. Cost of real estate revenue includes direct costs (e.g., development and construction costs), selling costs and other indirect costs.
Three months ended
The following table sets forth our residential real estate revenue and cost of
revenue activity:
Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
Units Cost of Gross Gross Units Cost of Gross Gross
Sold Revenue Revenue Profit Margin Sold Revenue Revenue Profit Margin
Dollars in millions
Homesites 203 $ 17.7 $ 8.7 $ 9.0 50.8 % 19 $ 2.4 $ 1.1 $ 1.3 54.2 %
Homes 2 1.0 0.9 0.1 10.0 % - - - - - %
Land sales N/A 0.1 - 0.1 100.0 % N/A - - - - %
Total 205 $ 18.8 $ 9.6 $ 9.2 48.9 % 19 $ 2.4 $ 1.1 $ 1.3 54.2 %
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Homesites. Revenue from homesite sales increased $15.3 million during the three
months ended March 31, 2021 , as compared to the same period in 2020, primarily
due to the mix and number of homesites sold per community, the timing of
homebuilder contractual closing obligations and the timing of development of
completed homesites in our residential communities. During the three months
ended March 31, 2021 and 2020, the average revenue, excluding homesite
residuals, per homesite sold was approximately $73,000 and $113,000 ,
respectively, due to the mix of sales from different communities, which included
the sale of 55 undeveloped homesites within the SouthWood community during the
three months ended March 31, 2021 . Gross margin decreased to 50.8% during the
three months ended March 31, 2021 , as compared to 54.2% during the same period
in 2020, primarily due to the mix and number of homesites sold from different
communities during each respective period. Gross margin may vary each period
depending on the location of homesite sales.
Homes. During the three months ended
Land sales. During the three months ended
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 our notes receivable. Interest expense consists of interest incurred on our portion of the total outstanding CDD debt.
Gain on contribution to equity method investment for the three months ended
Hospitality
The table below sets forth the results of operations of our hospitality segment:
Three Months Ended March 31,
2021 2020
In millions
Revenue:
Hospitality revenue $ 13.0 $ 6.5
Expenses:
Cost of hospitality revenue 11.3 7.2
Other operating expenses - 0.2
Depreciation 1.4 1.4
Total expenses 12.7 8.8
Operating income (loss) 0.3 (2.3)Income (loss) before equity in loss from unconsolidated affiliates and income taxes
$ 0.3 $ (2.3)
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Three Months Ended
The following table sets forth details of our hospitality segment revenue and
cost of revenue:
Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
Gross Gross Gross Gross
Revenue Profit Margin Revenue Profit (Deficit) Margin
In millions
Clubs $ 6.3 $ 1.5 23.8 % $ 3.8 $ 1.1 28.9 %
Hotel operations, food and
beverage operations,
short-term vacation
rentals and other
management services 5.3 0.1 1.9 % 2.5 (1.7) (68.0) %
Other 1.4 0.1 7.1 % 0.2 (0.1) (50.0) %
Total $ 13.0 $ 1.7 13.1 % $ 6.5 $ (0.7) (10.8) %
Revenue from our clubs increased $2.5 million , or 65.8%, during the three months
ended March 31, 2021 compared to the same period in 2020. The increase in
revenue in the current period was due to increases in the number of members and
membership revenue, as well as higher demand for club amenities that resulted in
revenue increases from the beach club, golf and charter flights. As of
March 31, 2021 , Watersound Club had 1,722 members, compared with 1,284 members
as of March 31, 2020 , an increase of 438 members. Our clubs gross margin
decreased to 23.8% during the three months ended March 31, 2021 , compared to
28.9% during the same period in 2020. The decrease in gross margin was due to
increased support services allocation and commission costs related to the growth
of our club memberships.
Revenue from our hotel operations, food and beverage operations, short-term
vacation rentals and other management services increased $2.8 million , or
112.0%, during the three months ended March 31, 2021 , as compared to the same
period in 2020. The increase is primarily due to increases in lodging revenue
from the WaterColor Inn and food and beverage operations consistent with
increased popularity of the region and year-round travel. The increase was also
due to the impact of the COVID-19 pandemic on the prior period, which resulted
in shut downs and reduced revenue beginning in mid-March 2020 . The three months
ended March 31, 2021 had a gross margin of 1.9%, compared to a negative gross
margin of 68.0% during the same period in 2020. The increase in gross margin is
due to an increase in year-round travel in the current period consistent with
the growth and popularity of the region, as well as management of expenses and
labor.
Revenue from other hospitality operations increased $1.2 million during the
three months ended March 31, 2021 , as compared to the same period in 2020. Our
other hospitality operations gross margin increased to 7.1% during the three
months ended March 31, 2021 , compared to a negative gross margin of 50.0% during
the same period in 2020. The increase in other hospitality revenue and gross
margin was primarily related to an increase in revenue for the WaterColor retail
store, as well as The Powder Room , which opened in December 2020 . We did not
have revenue from our marinas during the three months ended March 31, 2021 and
2020, due to the impact of Hurricane Michael on the marinas. See Note 7.
Hurricane Michael for additional information.
Our hospitality segment had a gross margin of 13.1% during the three months
ended March 31, 2021 , as compared to a negative gross margin of 10.8% during the
same period in 2020. The increase in gross margin is primarily due to an
increase in year-round travel in the current period consistent with the growth
and popularity of the region, as well as the management of expenses and labor.
The extent to which the COVID-19 pandemic may further impact our future hospitality operations will depend on future developments, which are highly uncertain.
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Commercial
The table below sets forth the results of operations of our commercial segment:
Three Months Ended March 31,
2021 2020
In millions
Revenue:
Leasing revenue
Commercial leasing revenue $ 3.8 $ 3.4
Apartment leasing revenue 1.6 0.9Senior living leasing revenue 0.2 - Total leasing revenue 5.6 4.3 Commercial and rural real estate revenue -
2.8
Timber revenue 1.6 1.9
Total revenue 7.2 9.0
Expenses:
Cost of leasing revenue 2.7 0.6Cost of commercial and rural real estate revenue -
0.7
Cost of timber revenue 0.1 0.2
Other operating expenses 0.9 0.9Depreciation, amortization and depletion 2.3
1.6
Total expenses 6.0 4.0
Operating income 1.2 5.0
Other (expense) income:
Interest expense (1.2) (0.9)Gain on contribution to equity method investment - 3.9 Total other (expense) income, net (1.2) 3.0 Income before equity in loss from unconsolidated affiliates and income taxes $ - $ 8.0
Three Months Ended
The following table sets forth details of our commercial segment revenue and
cost of revenue:
Three Months Ended March 31, 2021 Three Months Ended March 31, 2020
Gross Gross Gross Gross
Revenue Profit (Deficit) Margin Revenue Profit Margin
In millions
Leasing
Commercial leasing $ 3.8 $ 2.5 65.8 % $ 3.4 $ 2.3 67.6 %
Apartments leasing 1.6 1.0 62.5 % 0.9 1.4 155.6 %
Senior living leasing 0.2 (0.6) (300.0) % - - - %
Total leasing 5.6 2.9 51.8 % 4.3 3.7 86.0 %Commercial and rural real estate - -
- % 2.8 2.1 75.0 %
Timber 1.6 1.5 93.8 % 1.9 1.7 89.5 %
Total $ 7.2 $ 4.4 61.1 % $ 9.0 $ 7.5 83.8 %
Total leasing revenue increased $1.3 million , or 30.2%, during the three months
ended March 31, 2021 , as compared to the same period in 2020. The increase is
primarily due to new leases at Pier Park Crossings Phase II apartments, which
began leasing in the fourth quarter of 2020 and new leases at Watersound Origins
Crossings apartments and Watercrest senior living community, which began leasing
in the first quarter of 2021, as well as other new leases. Leasing gross margin
decreased during the three months ended March 31, 2021 to 51.8%, as compared to
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86.0% during the same period in 2020, primarily due to $0.7 million of business
interruption proceeds received for Pier Park Crossings apartments related to
Hurricane Michael in the prior period and start-up expenses for new assets in
the current period. As of March 31, 2021 , we had net rentable square feet of
approximately 907,000, of which approximately 780,000 square feet was under
lease. As of March 31, 2020 , we had net rentable square feet of approximately
869,000, of which approximately 743,000 square feet was under lease. During the
three months ended March 31, 2021 we did not provide any additional tenant rent
abatements or lease deferrals. We have $0.2 million of uncollected lease
deferrals remaining as of March 31, 2021 that were provided in 2020 due to the
impact of the COVID-19 pandemic.
The diversity of our commercial segment complements the growth of our
residential and hospitality segments. Commercial and rural real estate revenue
can vary depending on the proximity to developed areas and the mix and
characteristics of commercial and rural real estate sold in each period, with
varying compositions of retail, office, industrial and other commercial uses.
During the three months ended March 31, 2021 , we had one commercial and rural
real estate sale of approximately one acre for less than $0.1 million . During
the three months ended March 31, 2020 , we had five commercial and rural real
estate sales totaling approximately 80 acres for $2.8 million , resulting in a
gross profit margin of approximately 75.0 %. Commercial and rural real estate
revenue for the three months ended March 31, 2020 included $1.8 million related
to the sale of the SouthWood Town Center . As our focus continues to evolve more
towards recurring revenue from leasing operations, we expect to have limited
commercial and rural real estate sales. Further, we may continue to transform
and operate commercial properties for higher and better use. This may result in
certain assets moving from the commercial segment to the hospitality segment.
Timber revenue decreased $0.3 million , or 15.8%, to $1.6 million during the
three months ended March 31, 2021 , as compared to $1.9 million during the same
period in 2020. The decrease is primarily due to a decrease in the sales of fill
dirt and other products. There were 76,000 tons of wood products sold during the
three months ended March 31, 2021 , as compared to 86,000 tons of wood products
sold during the same period in 2020. The average price per wood product ton sold
increased to $18.94 during the three months ended March 31, 2021 , as compared to
$16.73 during the same period in 2020. Timber gross margin increased during the
three months ended March 31, 2021 , to 93.8% as compared to 89.5% during the same
period in 2020, primarily due to increases in prices and changes in product mix.
Other operating expenses include salaries and benefits, property taxes, CDD assessments, professional fees, marketing, project administration and other administrative expenses.
The increase of$0.7 million in depreciation, amortization and depletion expense during the three months endedMarch 31, 2021 , as compared to the same period in 2020, was primarily due to new properties placed in service.
Interest expense primarily includes interest incurred from our commercial leasing project financing and CDD debt.
Gain on contribution to equity method investment for the three months ended
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The total net rentable square feet and percentage leased of leasing properties by location are as follows:
March 31, 2021 December 31, 2020
Net Net
Rentable Rentable
Square Percentage Square Percentage
Location Feet Leased Feet Leased
Pier Park North JV Bay County, FL 320,310 92 % 320,310 92 %
VentureCrossings Bay County, FL 303,605 86 % 303,605 86 %
Beckrich Office Park (a) (b) Bay County, FL 86,296 80 % 86,296 80 %
WindMark Beach Town Center (a) (c) Gulf County, FL 44,748
47 % 44,748 47 %
WaterColor Town Center (a) Walton County, FL 22,716 87 % 23,121 79 %
Cedar Grove Commerce Park Bay County, FL 19,449 90 % 19,449 90 %
Beach Commerce Park (a) Bay County, FL 17,450 100 % 17,450 76 %
Port St. Joe Commercial Gulf County, FL 16,964 100 % 16,964 100 %
SummerCamp Commercial Franklin County, FL 13,000 0 % 13,000 0 %South Walton Commerce Park (d) Walton County, FL 11,570
88 % 11,570 88 %
WaterSound Gatehouse (a) Walton County, FL 10,271 87 % 10,271 87 %
WaterColor Crossings Walton County, FL 7,135 100 % 7,135 100 %
395 Office building Walton County, FL 6,700 100 % 6,700 100 %
Watersound Town Center Walton County, FL 6,496 100 % 6,496 100 %
Pier Park outparcel Bay County, FL 5,565 100 % 5,565 100 %
Topsail West Commercial Walton County, FL 3,500 100 % 3,500 100 %
Bank building Bay County, FL 3,346 100 % 3,346 100 %
Bank building Gulf County, FL 3,346 100 % 3,346 100 %
WaterColor HOA Office Walton County, FL 2,520 100 % 2,520 100 %
RiverCamps Bay County, FL 2,112 100 % 2,112 100 %
907,099 86 % 907,504 85 %
(a) In addition to net rentable square feet there is also space that we occupy or
that serves as common area.
(b) Included in net rentable square feet as of
2020, is 1,500 square feet leased to a consolidated JV.
(c) Included in net rentable square feet as of
(d) Included in net rentable square feet as of
2020, is 1,364 square feet leased to a consolidated JV.
Total units and percentage leased/occupied for apartments and senior living community by location are as follows:
March 31, 2021 December 31, 2020
Percentage Percentage
Leased Leased
Units Units Units of Units Units Units of Units
Location Planned Completed Leased Completed Completed Leased Completed Apartments Pier Park Crossings
Bay County, FL 240
240 238 99% 240 237 99%
Pier Park Crossings Phase II
120 120 115 96% 120 55 46%
Watersound Origins Crossings (a) Walton County, FL 217 54 47 87% 18 - 0%
Sea Sound (b) Bay County, FL 300 - - N/A - - N/A
Star Avenue (c) Bay County, FL 240 - - N/A - - N/A
Total apartment units 1,117 414 400 97% 378 292 77%
Senior living community
Watercrest (d) Walton County, FL 107 107 21 20% 107 - N/A
Total senior living units 107 107 21 20% 107 - N/A
Total units 1,224 521 421 81% 485 292 60%
(a) Construction of the initial six apartment buildings was completed as of the
end of the first quarter of 2021.
Construction began in the first quarter of 2020 and is ongoing. The Sea Sound (b) Apartments JV is unconsolidated and is accounted for under the equity method
of accounting.
(c) Construction began in the fourth quarter of 2020 and is ongoing.
(d) Construction was completed in the fourth quarter of 2020.
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The total tons sold and relative percentage of total tons sold by major type of wood product are as follows:
Three Months Ended March 31,
2021 2020
Pine pulpwood 41,000 54.0 % 42,000 48.8 %
Pine sawtimber 31,000 40.8 % 26,000 30.2 %
Pine grade logs 3,000 3.9 % 12,000 14.0 %
Other 1,000 1.3 % 6,000 7.0 %
Total 76,000 100.0 % 86,000 100.0 %
Liquidity and Capital Resources
As ofMarch 31, 2021 , we had cash and cash equivalents of$52.3 million , compared to$106.8 million as ofDecember 31, 2020 . During 2021, we transitioned our short-termU.S. Treasury Bills classified as cash equivalents toU.S. Treasury Bills classified as investments - debt securities. Our cash and cash equivalents as ofMarch 31, 2021 includes$17.0 million of U. S. Treasury Money Market Funds and$16.0 million of short-termU.S. Treasury Bills. In addition to cash and cash equivalents, we consider our investments classified as available-for-sale securities and equity securities ("Securities"), as being generally available to meet our liquidity needs. Securities are not as liquid as cash and cash equivalents, but they are generally convertible into cash within a relatively short period of time. As ofMarch 31, 2021 , we had investments - debt securities in U. S. Treasury Bills of$94.0 million and investments - equity securities in preferred stock investments of$1.6 million . See Note 5. Investments, for additional information regarding our investments. 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 interest payments on our long term debt, capital contributions to JVs, Latitude Margaritaville Watersound JV Note commitment, authorized stock repurchases and authorized dividends for the next twelve months. However, we are continuing to monitor the COVID-19 pandemic and its impact on our business, customers, tenants, and industry as a whole. During the three months endedMarch 31, 2021 , we incurred a total of$37.2 million for capital expenditures, which includes$7.3 million for our residential segment,$11.4 million for our commercial segment,$18.3 million for our hospitality segment and$0.2 million for corporate expenditures. As ofMarch 31, 2021 , we had a total of$167.4 million in construction and development related contractual obligations, of which a portion will be funded through committed or new financing arrangements. As ofMarch 31, 2021 andDecember 31, 2020 , we had various loans outstanding totaling$172.3 million and$161.4 million , respectively, with maturities fromMay 2023 throughJune 2060 . The weighted average rate on our variable rate loans as ofMarch 31, 2021 was 2.4%. See Item 3. Quantitative and Qualitative Disclosures about Market Risk for additional information regarding LIBOR related risks. See Note 10. Debt, Net for additional information. InOctober 2015 , the Pier Park North JV entered into a$48.2 million loan. As ofMarch 31, 2021 andDecember 31, 2020 ,$44.3 million and$44.6 million , respectively, was outstanding on the PPN JV Loan. The PPN JV Loan accrues interest at a rate of 4.1% per annum and matures inNovember 2025 . In connection with the PPN JV 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 10. Debt, Net for additional information. InMay 2018 , the Pier Park Crossings JV entered into a$36.6 million loan, insured by HUD, to finance the construction of apartments inPanama City Beach, Florida . As ofMarch 31, 2021 andDecember 31, 2020 ,$36.0 million and$36.1 million , respectively, was outstanding on the PPC JV Loan. The PPC JV Loan accrues interest at a rate of 4.0% per annum and matures inJune 2060 . A prepayment premium is due to the lender of 1.0% - 10.0% of any principal 59
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prepaid through
InMay 2019 , the Watersound Origins Crossings JV entered into a$37.9 million loan. As ofMarch 31, 2021 andDecember 31, 2020 ,$31.1 million and$27.2 million , respectively, was outstanding on the Watersound Origins Crossings JV Loan. The Watersound Origins Crossings JV Loan bears interest at a rate of 5.0% and matures inMay 2024 . The Watersound Origins Crossings JV Loan is secured by the real property, assignment of rents and the security interest in the rents and personal property. In connection with the Watersound Origins Crossings JV Loan, we executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Watersound Origins Crossings JV Loan. We are the sole guarantor and receive a monthly fee related to the guarantee from our JV partner based on the JV partner's ownership percentage. See Note 10. Debt, Net for additional information. InJune 2019 , the Watercrest JV entered into a$22.5 million loan. As ofMarch 31, 2021 andDecember 31, 2020 ,$18.9 million and$18.1 million , respectively, was outstanding on the Watercrest JV Loan. The Watercrest JV Loan bears interest at a rate of LIBOR plus 2.2% and matures inJune 2047 . The Watercrest JV Loan is secured by the real property, assignment of rents, leases and deposits and the security interest in the rents and personal property. In connection with the Watercrest JV 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. The Watercrest JV entered into an interest rate swap to hedge cash flows tied to changes in the underlying floating interest rate tied to LIBOR. The interest rate swap is effectiveJune 1, 2021 and matures onJune 1, 2024 and fixed the variable rate on the notional amount of related debt of$20.0 million to a rate of 4.37%. See Note 10. Debt, Net for additional information. InAugust 2019 , a wholly-owned subsidiary of ours entered into a$5.5 million loan. As of bothMarch 31, 2021 andDecember 31, 2020 ,$5.4 million was outstanding on the Beckrich Building III Loan. The Beckrich Building III Loan bears interest at a rate of LIBOR plus 1.7% and matures inAugust 2029 . The Beckrich Building III Loan is secured by the real property, assignment of leases, rents and profits and the security interest in the rents and personal property. In connection with the Beckrich Building III Loan, we executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Beckrich Building III Loan. See Note 10. Debt, Net for additional information. InOctober 2019 , the Pier Park Crossings Phase II JV entered into a$17.5 million loan. As ofMarch 31, 2021 andDecember 31, 2020 ,$17.4 million and$15.9 million , respectively, was outstanding on the PPC II JV Loan. The PPC II JV Loan matures inOctober 2024 and bears interest at a rate of LIBOR plus 2.25% during construction and LIBOR plus 2.10% after completion of construction and final draw. The PPC II JV Loan is secured by the real property, assignment of rents and leases and the security interest in the rents, leases and personal property. In connection with the PPC II JV Loan, we executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the PPC II JV Loan. As guarantor, our liability under the PPC II JV Loan will be reduced to 50% of the principal amount upon satisfaction of final advance conditions and reduced to 25% of the principal amount upon reaching and maintaining a certain debt service coverage ratio. We are the sole guarantor and receive a monthly fee related to the guarantee from our JV partner based on the JV partner's ownership percentage. See Note 10. Debt, Net for additional information. InMarch 2020 , a wholly-owned subsidiary of ours entered into a$15.3 million loan. As ofMarch 31, 2021 andDecember 31, 2020 ,$7.2 million and$3.5 million , respectively, was outstanding on theAirport Hotel Loan .The Airport Hotel Loan bears interest at LIBOR plus 2.0%, with a floor of 3.0%, and matures inMarch 2025 .The Airport Hotel Loan is secured by the real property, assignment of leases, rents and profits and the security interest in the rents and personal property. In connection with theAirport Hotel Loan , we executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under theAirport Hotel Loan . See Note 10. Debt, Net for additional information. InApril 2020 , thePier 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 ofMarch 31, 2021 andDecember 31, 2020 there was no principal balance outstanding on thePier Park Resort Hotel JV Loan .The Pier Park Resort Hotel JV Loan matures inMarch 2027 and bears interest at a rate of LIBOR plus 2.15% during construction and LIBOR plus 1.95% upon hotel opening.The Pier Park Resort Hotel JV Loan is secured by the real property, assignment of rents and leases 60 Table of Contents and the security interest in the rents, leases and personal property. In connection with thePier Park Resort Hotel JV Loan , as guarantor, 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 thePier Park Resort Hotel JV Loan will be released upon reaching and maintaining certain debt service coverage for twelve months. 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 or warranties to be performed on the part of such guarantor. See Note 10. Debt, Net for additional information. InNovember 2020 , a wholly-owned subsidiary of ours entered into a$16.8 million construction loan to finance the construction of a HomeWood Suites by Hilton hotel in theBreakfast Point area ofPanama City Beach, Florida . As ofMarch 31, 2021 andDecember 31, 2020 , there was no principal balance outstanding on theBreakfast Point Hotel Loan .The Breakfast Point Hotel Loan matures inNovember 2042 and bears interest at a rate of LIBOR plus 2.75% throughNovember 2022 , 3.25% over the 5-Year T-Bill Index fromNovember 2022 throughNovember 2027 and 3.25% over the 1-Year T-Bill Index fromNovember 2027 throughNovember 2042 , with a minimum rate of 3.75% throughout the term of the loan.The Breakfast Point Hotel Loan is secured by the real property, assignment of rents and the security interest in the rents and personal property. In connection with theBreakfast Point Hotel Loan , we executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under theBreakfast Point Hotel Loan . See Note 10. Debt, Net for additional information. InNovember 2020 , a wholly-owned subsidiary of ours entered into a$5.8 million construction loan to finance the construction of a self-storage facility inSanta Rosa Beach, Florida . As ofMarch 31, 2021 ,$1.5 million was outstanding on the Self-Storage Facility Loan. As ofDecember 31, 2020 , there was no principal balance outstanding on the Self-Storage Facility Loan. The Self-Storage Facility Loan matures inNovember 2025 and bears interest at a rate of LIBOR plus 2.5%, with a floor of 3.0%. Upon receipt of final lien waivers and certificate of occupancy, the Self-Storage Facility Loan will bear interest at a rate of LIBOR plus 2.35%, with a floor of 2.85%. The Self-Storage Facility Loan is secured by the real property, assignment of leases and rents and the security interest in the rents and personal property. In connection with the Self-Storage Facility Loan, we executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Self-Storage Facility Loan. Our liability as guarantor under the Self-Storage Facility Loan shall not exceed$2.9 million , plus any additional fees, upon reaching and maintaining certain debt service coverage. See Note 10. Debt, Net for additional information. InJanuary 2021 , The Lodge 30A JV entered into a$15.0 million construction loan to finance the construction of a boutique hotel in Seagrove Beach,Florida . As ofMarch 31, 2021 , there was no principal balance outstanding on the Lodge 30AJV Hotel Loan . The Lodge 30AJV Hotel Loan bears interest at a rate of 3.75% and matures inJanuary 2028 . The Lodge 30AJV Hotel Loan is secured by the real property, assignment of leases and rents and the security interest in the rents and personal property. In connection with the Lodge 30AJV Hotel 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 will be reduced to 75.0% for a twelve month period. The debt service coverage ratio will be tested annually thereafter and will be reduced to 50.0% in year four and 25% in year five. We will receive a monthly fee related to the guarantee from its JV partner based on the JV partner's ownership percentage. See Note 10. Debt, Net for additional information. InMarch 2021 , a wholly-owned subsidiary of ours entered into a$26.8 million construction loan to finance the construction of apartments inPanama City, Florida . As ofMarch 31, 2021 , there was no principal balance outstanding on the Star Avenue Apartments Loan. The Star Avenue Apartments Loan bears interest at a rate of LIBOR plus 2.45%, with a floor of 3.2%. Upon reaching a certain debt service coverage ratio the Star Avenue Apartments Loan will bear interest at a rate of LIBOR plus 2.25%, with a floor of 3.0%. The Star Avenue Apartments Loan matures inSeptember 2024 and includes an option for an extension of the maturity date by eighteen months, subject to certain conditions. The Star Avenue Apartments Loan is secured by the real property, assignment of rents and leases and the security interest in the rents, leases and personal property. In connection with the Star Avenue Apartments Loan, we executed a guarantee in favor of the lender to guarantee completion of the project and the payment and performance of the borrower under the Star Avenue Apartments Loan. As guarantor, our liability under the Star Avenue Apartments Loan will be reduced to 50% of the principal amount upon satisfaction of final advance conditions and reduced to 25% of the principal amount upon reaching and maintaining a certain debt service coverage ratio. In addition, the guarantee can become full recourse 61
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in the case of any fraud or intentional misrepresentation or failure to abide by other certain obligations on the part of such guarantor. See Note 10. 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$6.3 million as ofMarch 31, 2021 . Total outstanding CDD debt related to our land holdings was$15.4 million atMarch 31, 2021 , which was comprised of$12.5 million at SouthWood,$2.5 million at the existingPier Park retail center and$0.4 million at Wild Heron. We pay interest on this total outstanding CDD debt. As ofMarch 31, 2021 , our unconsolidated Sea Sound Apartments JV, Latitude Margaritaville Watersound JV, Pier Park TPS JV and Busy Bee JV had various loans outstanding, some of which we have entered into guarantees. See Note 4. Joint Ventures and Note 18. Commitments and Contingencies for additional information. InJune 2020 , we, as lender, entered into a$10.0 million secured revolving promissory note with the unconsolidated Latitude Margaritaville Watersound JV, as borrower. As ofMarch 31, 2021 andDecember 31, 2020 ,$4.8 million and$2.7 million , respectively, was outstanding on the Latitude Margaritaville Watersound JV Note. The Latitude Margaritaville Watersound JV Note was provided by us to finance the development of the pod-level, non-spine infrastructure, which 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 inJune 2025 . The Latitude Margaritaville Watersound JV 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 Note 9. Other Assets for additional information. During the three months endedMarch 31, 2021 , we did not repurchase shares of our common stock outstanding. During the three months endedMarch 31, 2020 , we repurchased a total of 411,113 shares of our common stock outstanding for an aggregate purchase price of$6.8 million including costs. See Note 14. Stockholders' Equity for additional information regarding common stock repurchases related to the Stock Repurchase Program. As part of a timberland sale in 2007 and 2008, we have recorded a retained interest with respect to notes contributed to bankruptcy-remote qualified SPEs of$13.1 million for the installment notes monetized throughMarch 31, 2021 . This balance represents the present value of future cash flows to be received over the life of the installment notes, using management's best estimates of underlying assumptions, including credit risk and interest rates as of the date of the monetization, plus the accretion of investment income based on an effective yield, which is recognized over the term of the notes, less actual cash receipts. As ofMarch 31, 2021 andDecember 31, 2020 , we were required to provide surety bonds that guarantee completion of certain infrastructure in certain development projects and mitigation banks of$24.2 million as of each period, as well as standby letters of credit in the amount of$4.6 million and$6.6 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 agencies for real estate transactions were$5.2 million and$4.5 million as ofMarch 31, 2021 andDecember 31, 2020 , respectively, these escrow funds are not available for regular operations. 62 Table of Contents
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