The St. Joe Company
07/23/2025 | Press release | Distributed by Public on 07/23/2025 14:52
Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
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.
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 assets 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 second quarter of 2025 compared to the second quarter of 2024 include:
| ● | Quarterly net income attributable to the Company increased by 20.4% to $29.5 million during the three months ended June 30, 2025, from $24.5 million in the same period in 2024. |
| ● | Quarterly revenue increased by 15.7% to $129.1 million during the three months ended June 30, 2025, from $111.6 million in the same period in 2024. |
| ● | Real estate revenue increased by 27.0% to $43.8 million during the three months ended June 30, 2025, from $34.5 million in the same period in 2024. Homesite closings volume increased by 21.0% to 225 homesites during the three months ended June 30, 2025, from 186 homesites in the same period in 2024. There were 482 homesites placed under contract during the second quarter of 2025. |
| ● | Hospitality revenue increased by 10.4% to a quarterly record of $68.8 million during the three months ended June 30, 2025, from $62.3 million in the same period in 2024. |
| ● | Leasing revenue increased by 11.5% to a quarterly record of $16.5 million during the three months ended June 30, 2025, from $14.8 million in the same period in 2024. |
Market Conditions
Throughout the first six months of 2025, we continued to generate positive financial results. While macroeconomic factors such as uncertainty over tariffs, inflation, elevated interest rates and higher insurance costs for consumers and overall consumer confidence, 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. While elevated interest rates and higher insurance costs 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:
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2025 |
2024 |
2025 |
2024 |
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Segment Operating Revenue |
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Residential |
29.5 |
% |
28.4 |
% |
31.9 |
% |
31.4 |
% |
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|
Hospitality |
55.1 |
% |
56.7 |
% |
50.0 |
% |
51.8 |
% |
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|
Commercial |
14.4 |
% |
13.8 |
% |
17.0 |
% |
15.8 |
% |
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|
Other |
1.0 |
% |
1.1 |
% |
1.1 |
% |
1.0 |
% |
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|
|
Consolidated operating revenue |
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
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|
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.
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, Pigeon Creek, 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 June 30, 2025, the unconsolidated Latitude Margaritaville Watersound JV had completed 1,992 home sale transactions of the total estimated 3,500 homes planned in the community and had 216 homes under contract, which are expected to result in a sales value to the JV of approximately $129.4 million at closing of the homes. See Note 4. Joint Ventures for additional information.
The residential homesite pipeline by community/project is as follows:
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Residential Homesite Pipeline (a) |
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Platted or |
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Additional |
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Under |
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Engineering |
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Entitlements with |
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Community/Project |
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Location |
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Development |
|
or Permitting |
|
Concept Plan |
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Total |
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Breakfast Point East (b) |
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Bay County, FL |
|
133 |
|
85 |
|
105 |
|
323 |
|
College Station |
|
Bay County, FL |
|
- |
|
59 |
|
209 |
|
268 |
|
East Lake Creek (b) |
|
Bay County, FL |
|
- |
|
- |
|
200 |
|
200 |
|
East Lake Powell (c) |
|
Bay County, FL |
|
- |
|
- |
|
360 |
|
360 |
|
Lake Powell (d) |
|
Bay County, FL |
|
- |
|
327 |
|
1,025 |
|
1,352 |
|
Latitude Margaritaville Watersound (d) (e) |
|
Bay County, FL |
|
667 |
|
841 |
|
- |
|
1,508 |
|
Salt Creek at Mexico Beach (b) |
|
Bay County, FL |
|
- |
|
131 |
|
154 |
|
285 |
|
Salt Creek at Mexico Beach Townhomes (b) |
|
Bay County, FL |
|
- |
|
42 |
|
- |
|
42 |
|
Park Place |
|
Bay County, FL |
|
193 |
|
- |
|
- |
|
193 |
|
Pigeon Creek (d) |
|
Bay County, FL |
|
- |
|
- |
|
3,330 |
|
3,330 |
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RiverCamps (c) |
|
Bay County, FL |
|
- |
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- |
|
149 |
|
149 |
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SouthWood (f) |
|
Leon County, FL |
|
- |
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- |
|
920 |
|
920 |
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SummerCamp Beach (b) |
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Franklin County, FL |
|
16 |
|
- |
|
260 |
|
276 |
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Teachee (d) |
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Bay County, FL |
|
- |
|
106 |
|
1,644 |
|
1,750 |
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Titus Park |
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Bay County, FL |
|
115 |
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- |
|
564 |
|
679 |
|
Bayside at Ward Creek (d) |
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Bay County, FL |
|
- |
|
334 |
|
- |
|
334 |
|
Breakwater at Ward Creek (d) |
|
Bay County, FL |
|
73 |
|
97 |
|
- |
|
170 |
|
Salt Grass at Ward Creek (d) |
|
Bay County, FL |
|
181 |
|
305 |
|
- |
|
486 |
|
Watersound Camp Creek (f) |
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Walton County, FL |
|
43 |
|
- |
|
- |
|
43 |
|
Watersound Origins (f) |
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Walton County, FL |
|
97 |
|
- |
|
- |
|
97 |
|
Watersound Origins West (d) |
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Walton County, FL |
|
163 |
|
358 |
|
2,759 |
|
3,280 |
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West Bay Creek (d) |
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Bay County, FL |
|
- |
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- |
|
5,250 |
|
5,250 |
|
West Laird (d) |
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Bay County, FL |
|
- |
|
1,068 |
|
1,117 |
|
2,185 |
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WindMark Beach (f) |
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Gulf County, FL |
|
163 |
|
306 |
|
329 |
|
798 |
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Total Homesites |
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|
1,844 |
|
4,059 |
|
18,375 |
|
24,278 |
| (a) | The number of homesites are preliminary and are subject to change. Includes 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) | Planned Unit Development ("PUD"). |
| (c) | Development Agreement ("DA"). |
| (d) | Detailed Specific Area Plan ("DSAP"). |
| (e) | The unconsolidated Latitude Margaritaville Watersound JV builds and sells homes in this community. |
| (f) | Development of Regional Impact ("DRI"). |
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 June 30, 2025, we had nineteen different homebuilders within our residential communities. As of June 30, 2025, we had 1,209 residential homesites under contract, which are expected to result in revenue of approximately $121.7 million, plus residuals, at closing of the homesites over the next several years. By comparison, as of June 30, 2024, we had 1,303 residential homesites under contract, with an expected revenue of approximately $114.0 million, plus residuals. The change in homesites under contract is due to homesite transactions since the end of the prior period, new contracts 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 June 30, 2025, in addition to the 1,209 homesites under contract in other residential communities, our unconsolidated Latitude Margaritaville Watersound JV had 216 homes under contract, which together with the 1,209 homesites are expected to result in a sales value of approximately $251.2 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. Our hospitality segment may also generate revenue from the sale of operating properties. Real estate sales in our hospitality segment incur costs of revenue directly associated with the land, development, construction and selling costs. 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 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:
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Hotel |
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Location |
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Rooms (a) |
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Camp Creek Inn |
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Walton County, FL |
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75 |
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WaterColor Inn |
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Walton County, FL |
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67 |
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The Pearl Hotel |
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Walton County, FL |
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55 |
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Watersound Inn |
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Walton County, FL |
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11 |
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The Lodge 30A (b) |
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Walton County, FL |
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85 |
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Home2 Suites by Hilton Santa Rosa Beach |
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Walton County, FL |
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107 |
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Embassy Suites by Hilton Panama City Beach Resort (b) |
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Bay County, FL |
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255 |
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Hilton Garden Inn Panama City Airport |
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Bay County, FL |
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143 |
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Homewood Suites by Hilton Panama City Beach |
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Bay County, FL |
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131 |
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Hotel Indigo Panama City Marina |
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Bay County, FL |
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124 |
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TownePlace Suites by Marriott Panama City Beach Pier Park (c) |
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Bay County, FL |
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124 |
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Residence Inn Panama City Beach Pier Park (d) |
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Bay County, FL |
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121 |
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Total rooms |
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1,298 |
| (a) | Includes hotels currently in operation. We have significant additional entitlements for future hotel projects on our land holdings. |
| (b) | Property is related to a consolidated JV. See Note 4. Joint Venturesfor additional information. |
| (c) | The hotel is operated by our JV partner. The Pier Park TPS JV is unconsolidated and is accounted for using the equity method, which is included within our commercial segment. See Note 4. Joint Venturesfor additional information. |
| (d) | The hotel, which opened in April 2024, is operated by our JV partner. The Pier Park RI JV is unconsolidated and is accounted for using the equity method, which is included within our commercial segment. See Note 4. Joint Venturesfor additional information. |
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 believe the diversity of our commercial segment complements the growth of our residential and hospitality segments. 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:
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June 30, 2025 |
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December 31, 2024 |
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Percentage |
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Percentage |
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Leased |
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Leased |
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Units |
Units |
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Units |
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of Units |
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Units |
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Units |
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of Units |
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Location |
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Planned (a) |
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Completed |
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Leased |
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Completed |
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Completed |
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Leased |
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Completed |
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Multi-family |
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Pier Park Crossings (b) |
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Bay County, FL |
|
240 |
|
240 |
|
234 |
|
98 |
% |
|
240 |
|
216 |
|
90 |
% |
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Pier Park Crossings Phase II (b) |
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Bay County, FL |
|
120 |
|
120 |
|
119 |
|
99 |
% |
|
120 |
|
111 |
|
93 |
% |
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Watersound Origins Crossings (b) |
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Walton County, FL |
|
217 |
|
217 |
|
207 |
|
95 |
% |
|
217 |
|
202 |
|
93 |
% |
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North Bay Landing |
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Bay County, FL |
|
240 |
|
240 |
|
230 |
|
96 |
% |
|
240 |
|
220 |
|
92 |
% |
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Mexico Beach Crossings (b) |
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Bay County, FL |
|
216 |
|
216 |
|
179 |
|
83 |
% |
|
216 |
|
151 |
|
70 |
% |
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Origins Crossings Townhomes (c) |
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Walton County, FL |
|
54 |
|
54 |
|
22 |
|
41 |
% |
|
64 |
|
44 |
|
69 |
% |
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WindMark Beach |
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Gulf County, FL |
|
31 |
|
31 |
|
18 |
|
58 |
% |
|
31 |
|
17 |
|
55 |
% |
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Total multi-family units (d) |
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1,118 |
|
1,118 |
|
1,009 |
|
90 |
% |
|
1,128 |
|
961 |
|
85 |
% |
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Senior living communities |
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Watercrest (b) |
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Walton County, FL |
|
107 |
|
107 |
|
105 |
|
98 |
% |
|
107 |
|
103 |
|
96 |
% |
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Watersound Fountains (e) |
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Walton County, FL |
|
148 |
|
148 |
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45 |
|
30 |
% |
|
148 |
|
39 |
|
26 |
% |
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Total senior living units |
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255 |
|
255 |
|
150 |
|
59 |
% |
|
255 |
|
142 |
|
56 |
% |
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Total units |
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1,373 |
|
1,373 |
|
1,159 |
|
84 |
% |
|
1,383 |
|
1,103 |
|
80 |
% |
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| (a) | We have additional multi-family communities in various stages of planning. |
| (b) | Property is related to a consolidated JV. See Note 4. Joint Venturesfor additional information. |
| (c) | In January 2025, the townhomes were platted as individual units, which created the ability to sell them individually. New leases are no longer being entered into. In the second quarter of 2025, we sold ten townhomes,included within our residential segment. |
| (d) | All multi-family communities are managed by our unconsolidated Watersound Management JV. The Watersound Management JV is unconsolidated and is accounted for using the equity method. See Note 4. Joint Ventures for additional information. |
| (e) | The community opened in March 2024 and is currently under lease-up. The senior living community is operated by our JV partner. The Watersound Fountains Independent Living JV is unconsolidated and is accounted for using the equity method. See Note 4. Joint Ventures for additional information. |
As of June 30, 2025, our leasing portfolio consists of approximately 1,177,000 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.
The total net rentable square feet and percentage leased of leasing properties are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2025 |
|
|
December 31, 2024 |
|
||||
|
|
|
Net |
|
|
Net |
|
|
|||||
|
|
|
|
|
Rentable |
|
|
|
|
Rentable |
|
|
|
|
|
|
|
|
Square |
|
Percentage |
|
|
Square |
|
Percentage |
|
|
|
|
Location |
|
Feet* |
|
Leased |
|
|
Feet* |
|
Leased |
|
|
Pier Park North (a) |
Bay County, FL |
320,310 |
100 |
% |
|
320,310 |
100 |
% |
||||
|
VentureCrossings |
Bay County, FL |
303,605 |
100 |
% |
|
303,605 |
100 |
% |
||||
|
Watersound Town Center (b) (c) |
|
Walton County, FL |
|
153,825 |
|
89 |
% |
|
155,962 |
|
86 |
% |
|
Beckrich Office Park (c) (d) (e) |
Bay County, FL |
80,128 |
86 |
% |
|
78,322 |
90 |
% |
||||
|
FSU/TMH Medical Campus (f) |
|
Bay County, FL |
|
78,670 |
|
100 |
% |
|
78,670 |
|
100 |
% |
|
Watersound Self-Storage |
|
Walton County, FL |
|
67,694 |
|
92 |
% |
|
67,694 |
|
90 |
% |
|
WindMark Beach Town Center (c) (g) |
Gulf County, FL |
44,748 |
57 |
% |
|
44,748 |
71 |
% |
||||
|
Cedar Grove Commerce Park |
|
Bay County, FL |
|
19,389 |
|
100 |
% |
|
19,389 |
|
100 |
% |
|
WaterColor Town Center (c) (h) |
Walton County, FL |
17,560 |
95 |
% |
|
22,199 |
75 |
% |
||||
|
Port St. Joe Commercial |
Gulf County, FL |
16,964 |
100 |
% |
|
16,964 |
100 |
% |
||||
|
Beach Commerce Park (c) |
Bay County, FL |
14,800 |
100 |
% |
|
14,800 |
100 |
% |
||||
|
South Walton Commerce Park |
|
Walton County, FL |
|
11,570 |
|
100 |
% |
|
11,570 |
|
100 |
% |
|
Watersound Gatehouse (c) |
Walton County, FL |
10,271 |
82 |
% |
|
10,271 |
87 |
% |
||||
|
Other (i) |
|
Bay, Gulf and Walton Counties, FL |
|
37,590 |
|
100 |
% |
|
37,590 |
|
100 |
% |
|
|
1,177,124 |
95 |
% |
|
1,182,094 |
95 |
% |
|||||
| * | Net Rentable Square Feet is designated as the current square feet available for lease as specified in the applicable lease agreements plus management's estimate of space available for lease based on construction drawings. |
| (a) | Property is related to a consolidated JV. See Note 4. Joint Venturesfor additional information. |
| (b) | Includes net rentable square feet of 4,615 and 6,752 within our residential segment as of June 30, 2025 and December 31, 2024, respectively. Included in net rentable square feet as of December 31, 2024, is 2,137 square feet leased to a consolidated JV. Included in net rentable square feet as of June 30, 2025 and December 31, 2024, is 1,200 square feet leased to an unconsolidated JV. |
| (c) | In addition to net rentable square feet, there is also space that we occupy or that serves as common area. |
| (d) | We occupied approximately 22,556 and 24,000 square feet as our headquarters as of June 30, 2025 and December 31, 2024, respectively, each of which is excluded from net rentable square feet. |
| (e) | Included in net rentable square feet as of December 31, 2024, is 1,500 square feet leased to a consolidated JV. |
| (f) | A medical office building was completed in the third quarter of 2024. |
| (g) | Included in net rentable square feet as of June 30, 2025 and December 31, 2024, is 5,658 and 13,808 square feet, respectively, of unfinished space. |
| (h) | As of December 31, 2024, a portion of vacant space was being held as future office for our new boutique real estate brokerage business. |
| (i) | Includes various other properties, each with less than 10,000 net rentable square feet. |
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2025 |
||||||
|
|
|
Location |
|
Completed Square Feet |
|
Square Feet Under Construction |
|
Additional Planned Square Feet |
|
Total Square Feet* |
|
Watersound Town Center (a) |
|
Walton County, FL |
|
155,962 |
|
13,200 |
|
230,838 |
|
400,000 |
|
Watersound West Bay Center |
|
Bay County, FL |
|
3,366 |
|
18,304 |
|
478,330 |
|
500,000 |
|
FSU/TMH Medical Campus |
|
Bay County, FL |
|
78,670 |
|
- |
|
241,330 |
|
320,000 |
|
|
|
|
|
237,998 |
|
31,504 |
|
950,498 |
|
1,220,000 |
| * | Total square feet are based on current estimates and are subject to change. |
| (a) | We occupy 2,137 square feet of the completed space. |
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 six 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 assets 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.
Results of Operations
Consolidated Results
The following table sets forth a comparison of the results of our operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Six Months Ended |
||||||||
|
|
|
June 30, |
|
June 30, |
||||||||
|
|
2025 |
2024 |
2025 |
2024 |
||||||||
|
|
|
In millions |
||||||||||
|
Revenue: |
|
|
|
|
||||||||
|
Real estate revenue |
|
$ |
43.8 |
|
$ |
34.5 |
|
$ |
82.1 |
|
$ |
68.7 |
|
Hospitality revenue |
|
68.8 |
|
62.3 |
|
108.4 |
|
101.6 |
||||
|
Leasing revenue |
|
16.5 |
|
14.8 |
|
32.8 |
|
29.1 |
||||
|
Total revenue |
|
129.1 |
|
111.6 |
|
223.3 |
|
199.4 |
||||
|
Expenses: |
|
|
|
|
|
|||||||
|
Cost of real estate revenue |
|
23.8 |
|
16.6 |
|
42.6 |
|
32.7 |
||||
|
Cost of hospitality revenue |
|
42.3 |
|
37.9 |
|
74.7 |
|
68.2 |
||||
|
Cost of leasing revenue |
|
7.6 |
|
7.3 |
|
15.0 |
|
14.5 |
||||
|
Corporate and other operating expenses |
|
6.4 |
|
5.9 |
|
13.0 |
|
12.9 |
||||
|
Depreciation, depletion and amortization |
|
12.0 |
|
11.3 |
|
24.1 |
|
22.5 |
||||
|
Total expenses |
|
92.1 |
|
79.0 |
|
169.4 |
|
150.8 |
||||
|
Operating income |
|
37.0 |
|
32.6 |
|
53.9 |
|
48.6 |
||||
|
Other income (expense): |
|
|
|
|
|
|||||||
|
Investment income, net |
|
3.2 |
|
3.4 |
|
6.6 |
|
6.8 |
||||
|
Interest expense |
|
(7.8) |
|
(8.5) |
|
(15.5) |
|
(17.1) |
||||
|
Equity in income from unconsolidated joint ventures |
|
|
7.5 |
|
|
5.4 |
|
|
17.7 |
|
|
12.8 |
|
Other expense, net |
|
(0.2) |
|
(0.1) |
|
(0.5) |
|
(0.5) |
||||
|
Total other income, net |
|
2.7 |
|
0.2 |
|
8.3 |
|
2.0 |
||||
|
Income before income taxes |
|
39.7 |
|
32.8 |
|
62.2 |
|
50.6 |
||||
|
Income tax expense |
|
(9.9) |
|
(8.3) |
|
(15.8) |
|
(13.0) |
||||
|
Net income |
|
$ |
29.8 |
|
$ |
24.5 |
|
$ |
46.4 |
|
$ |
37.6 |
Real Estate Revenue and Gross Profit
The following table sets forth a comparison of our total consolidated real estate revenue and gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
||||||||||||||||||
|
|
|
2025 |
% (a) |
2024 |
% (a) |
2025 |
% (a) |
2024 |
% (a) |
|
||||||||||||
|
|
|
Dollars in millions |
|
|||||||||||||||||||
|
Revenue: |
|
|
|
|
||||||||||||||||||
|
Residential real estate revenue |
|
$ |
38.1 |
87.0 |
% |
$ |
31.7 |
91.9 |
% |
|
$ |
71.0 |
86.5 |
% |
$ |
62.5 |
91.0 |
% |
||||
|
Commercial and forestry real estate revenue |
|
3.3 |
7.5 |
% |
0.7 |
2.0 |
% |
|
6.5 |
7.9 |
% |
2.1 |
3.1 |
% |
||||||||
|
Timber revenue |
|
|
1.3 |
|
3.0 |
% |
|
1.1 |
|
3.2 |
% |
|
|
2.5 |
|
3.0 |
% |
|
2.3 |
|
3.3 |
% |
|
Other revenue |
|
1.1 |
2.5 |
% |
1.0 |
2.9 |
% |
|
2.1 |
2.6 |
% |
1.8 |
2.6 |
% |
||||||||
|
Real estate revenue |
|
$ |
43.8 |
100.0 |
% |
$ |
34.5 |
100.0 |
% |
|
$ |
82.1 |
100.0 |
% |
$ |
68.7 |
100.0 |
% |
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit: |
|
|
|
|
|
|
||||||||||||||||
|
Residential real estate |
|
$ |
17.0 |
44.6 |
% |
$ |
15.9 |
50.2 |
% |
|
$ |
31.9 |
44.9 |
% |
$ |
31.7 |
50.7 |
% |
||||
|
Commercial and forestry real estate |
|
1.6 |
48.5 |
% |
0.7 |
100.0 |
% |
|
4.7 |
72.3 |
% |
1.8 |
85.7 |
% |
||||||||
|
Timber |
|
|
1.1 |
|
84.6 |
% |
|
0.8 |
|
72.7 |
% |
|
|
2.1 |
|
84.0 |
% |
|
1.9 |
|
82.6 |
% |
|
Other |
|
0.3 |
27.3 |
% |
0.5 |
50.0 |
% |
|
0.8 |
38.1 |
% |
0.6 |
33.3 |
% |
||||||||
|
Gross profit |
|
$ |
20.0 |
45.7 |
% |
$ |
17.9 |
51.9 |
% |
|
$ |
39.5 |
48.1 |
% |
$ |
36.0 |
52.4 |
% |
||||
| (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 June 30, 2025, residential real estate revenue increased $6.4 million, or 20.2%, to $38.1 million, as compared to $31.7 million during the same period in 2024. During the three months ended June 30, 2025, residential real estate gross profit increased $1.1 million to $17.0 million (or gross margin of 44.6%), as compared to $15.9 million (or gross margin of 50.2%) during the same period in 2024. During the three months ended June 30, 2025, we sold 225 homesites and 10 homes, compared to 186 homesites during the same period in 2024. During the three months ended June 30, 2025 and 2024, the average base revenue, excluding homesite residuals, per homesite sold was approximately $122,000 and $140,000, 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.
During the six months ended June 30, 2025, residential real estate revenue increased $8.5 million, or 13.6%, to $71.0 million, as compared to $62.5 million during the same period in 2024. During the six months ended June 30, 2025, residential real estate gross profit increased $0.2 million to $31.9 million (or gross margin of 44.9%), as compared to $31.7 million (or gross margin of 50.7%) during the same period in 2024. During the six months ended June 30, 2025, we sold 474 homesites and 10 homes, compared to 402 homesites during the same period in 2024. During the six months ended June 30, 2025 and 2024, the average base revenue, excluding homesite residuals, per homesite sold was approximately $118,000 and $128,000, 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 June 30, 2025, we had five commercial and forestry real estate sales totaling approximately 11 acres for $3.3 million, resulting in a gross profit of $1.6 million (or gross margin of 48.5%), which included the sale of a property used in hospitality operations for $1.4 million. During the three months ended June 30, 2024, we had a commercial and forestry real estate sale totaling
approximately 168 acres for $0.7 million, with de minimis cost of revenue resulting in a gross profit margin of approximately 100.0%.
During the six months ended June 30, 2025, we had seven commercial and forestry real estate sales totaling approximately 144 acres for $6.5 million, resulting in a gross profit of $4.7 million (or gross margin of 72.3%), which included the sale of a property used in hospitality operations for $1.4 million. During the six months ended June 30, 2024, we had three commercial and forestry real estate sales totaling approximately 243 acres for $2.1 million, resulting in a gross profit of $1.8 million (or gross margin of 85.7%).
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, construction or other costs incurred on the property.
Timber Revenue and Gross Profit. Timber revenue increased $0.2 million, or 18.2%, to $1.3 million during the three months ended June 30, 2025, as compared to $1.1 million in the same period in 2024. There were 62,000 tons of wood products sold at an average price per ton of $19.64 during the three months ended June 30, 2025, as compared to 67,000 tons of wood products sold at an average price per ton of $14.09, during the same period in 2024. Timber gross margin was 84.6% during the three months ended June 30, 2025, as compared to 72.7% during the same period in 2024. The increase was primarily due to higher prices in the current period.
Timber revenue increased $0.2 million, or 8.7%, to $2.5 million during the six months ended June 30, 2025, as compared to $2.3 million in the same period in 2024. There were 135,000 tons of wood products sold at an average price per ton of $16.90 during the six months ended June 30, 2025, as compared to 142,000 tons of wood products sold at an average price per ton of $14.48, during the same period in 2024. Timber gross margin was 84.0% during the six months ended June 30, 2025, as compared to 82.6% during the same period in 2024. The increase was primarily due to higher prices in the current period.
Other Revenue. Other revenue primarily consists of title insurance and real estate brokerage business revenue and mitigation bank credit sales.
Hospitality Revenue and Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
|
|
|
2025 |
|
2024 |
2025 |
|
2024 |
|||||||||
|
|
|
In millions |
|
|||||||||||||
|
Hospitality revenue |
|
$ |
68.8 |
|
|
$ |
62.3 |
|
|
$ |
108.4 |
|
|
$ |
101.6 |
|
|
Gross profit |
|
$ |
26.5 |
|
|
$ |
24.4 |
|
|
$ |
33.7 |
|
|
$ |
33.4 |
|
|
Gross margin |
|
38.5 |
% |
|
39.2 |
% |
|
31.1 |
% |
|
32.9 |
% |
||||
Hospitality revenue increased $6.5 million, or 10.4%, to $68.8 million during the three months ended June 30, 2025, as compared to $62.3 million in the same period in 2024. The increase in hospitality revenue was primarily related to the increase 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 also related to an increase in hotel operations, due to the timing of holidays and school breaks. Hospitality gross margin decreased to 38.5% during the three months ended June 30, 2025, compared to 39.2% during the same period in 2024. The decrease in gross margin during the current period was primarily due to ongoing operating costs for The Third golf course and the Shark's Tooth clubhouse.
Hospitality revenue increased $6.8 million, or 6.7%, to $108.4 million during the six months ended June 30, 2025, as compared to $101.6 million in the same period in 2024. The increase in hospitality revenue was primarily related to the increase 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 also related to an increase in hotel operations, due to the timing of holidays and school breaks. As of June 30, 2025, Watersound Club had 3,551 members, compared with 3,571 members as of June 30, 2024, a net decrease of 20 members. As of both June 30, 2025 and 2024, we had 1,053 operational hotel rooms (excluding 245 hotel rooms related to unconsolidated JVs). Hospitality gross margin decreased to 31.1% during the six months ended June 30, 2025, compared to 32.9% during the same period in 2024. The decrease in gross margin was primarily due to ongoing operating costs for The Third golf course and reopening and ongoing operating costs of the Shark's Tooth clubhouse during the current period.
Leasing Revenue and Gross Profit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||
|
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
||||||||
|
|
|
In millions |
|
|||||||||||||
|
Leasing revenue |
|
$ |
16.5 |
|
|
$ |
14.8 |
|
|
$ |
32.8 |
|
|
$ |
29.1 |
|
|
Gross profit |
|
$ |
8.9 |
|
|
$ |
7.5 |
|
|
$ |
17.8 |
|
|
$ |
14.6 |
|
|
Gross margin |
|
53.9 |
% |
|
50.7 |
% |
|
54.3 |
% |
|
50.2 |
% |
||||
Leasing revenue increased $1.7 million, or 11.5%, to $16.5 million during the three months ended June 30, 2025, as compared to $14.8 million in the same period in 2024. The increase was primarily due to additional commercial property leases, as well as other leases. Leasing gross margin increased to 53.9% during the three months ended June 30, 2025, as compared to 50.7% during the same period in 2024. The increase in leasing gross margin was primarily due to additional leases in the current period.
Leasing revenue increased $3.7 million, or 12.7%, to $32.8 million during the six months ended June 30, 2025, as compared to $29.1 million in the same period in 2024. The increase was primarily due to additional commercial property and marina leases, as well as other leases. Leasing gross margin increased to 54.3% during the six months ended June 30, 2025, as compared to 50.2% 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||
|
|
|
2025 |
2024 |
2025 |
2024 |
|||||||
|
|
|
In millions |
||||||||||
|
Employee costs |
|
$ |
3.2 |
|
$ |
3.1 |
|
$ |
6.0 |
|
$ |
6.8 |
|
Property taxes and insurance |
|
1.6 |
|
1.2 |
|
3.2 |
|
2.7 |
||||
|
Professional fees |
|
0.7 |
|
0.6 |
|
2.0 |
|
1.7 |
||||
|
Marketing and owner association costs |
|
0.3 |
|
0.4 |
|
0.6 |
|
0.5 |
||||
|
Occupancy, repairs and maintenance |
|
0.1 |
|
0.1 |
|
0.2 |
|
0.3 |
||||
|
Other miscellaneous |
|
0.5 |
|
0.5 |
|
1.0 |
|
0.9 |
||||
|
Total corporate and other operating expenses |
|
$ |
6.4 |
|
$ |
5.9 |
|
$ |
13.0 |
|
$ |
12.9 |
Corporate and other operating expenses increased $0.5 million to $6.4 million during the three months ended June 30, 2025, as compared to $5.9 million in the same period in 2024. Corporate and other operating expenses were comparable for the six months ended June 30, 2025 and 2024.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization expense increased $0.7 million and $1.6 million during the three and six months ended June 30, 2025, respectively, as compared to the same periods 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
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||
|
|
|
2025 |
2024 |
2025 |
2024 |
|||||||
|
|
|
In millions |
||||||||||
|
Interest, dividend and accretion income |
|
$ |
0.7 |
|
$ |
0.9 |
|
$ |
1.3 |
|
$ |
1.7 |
|
Interest income from investments in special purpose entities |
|
2.0 |
|
2.0 |
|
4.0 |
|
4.0 |
||||
|
Interest earned on notes receivable and other interest |
|
0.5 |
|
0.5 |
|
1.3 |
|
1.1 |
||||
|
Total investment income, net |
|
$ |
3.2 |
|
$ |
3.4 |
|
$ |
6.6 |
|
$ |
6.8 |
Investment income, net for the three and six months ended June 30, 2025 and 2024 were comparable.
Interest Expense
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||
|
|
|
2025 |
2024 |
2025 |
2024 |
|||||||
|
|
|
In millions |
||||||||||
|
Interest incurred for project financing and other interest expense |
|
$ |
5.6 |
|
$ |
6.3 |
|
$ |
11.1 |
|
$ |
12.7 |
|
Interest expense and amortization of discount and issuance costs for Senior Notes issued by special purpose entity |
|
|
2.2 |
|
|
2.2 |
|
|
4.4 |
|
|
4.4 |
|
Total interest expense |
|
$ |
7.8 |
|
$ |
8.5 |
|
$ |
15.5 |
|
$ |
17.1 |
Interest expense decreased $0.7 million, or 8.2%, to $7.8 million during the three months ended June 30, 2025, as compared to $8.5 million in the same period in 2024. Interest expense decreased $1.6 million, or 9.4%, to $15.5 million during the six months ended June 30, 2025, as compared to $17.1 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 from Unconsolidated Joint Ventures
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.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||||
|
|
|
2025 |
|
2024 |
|
2025 |
|
2024 |
|||||||
|
|
|
In millions |
|||||||||||||
|
Latitude Margaritaville Watersound JV (a) |
|
$ |
8.4 |
|
$ |
6.5 |
|
$ |
21.1 |
|
$ |
14.8 |
|||
|
Watersound Fountains Independent Living JV (b) |
|
|
(0.9) |
|
|
(1.1) |
|
|
(2.0) |
|
|
(1.9) |
|||
|
Pier Park TPS JV |
|
|
0.2 |
|
|
0.1 |
|
|
(0.1) |
|
|
(0.1) |
|||
|
Pier Park RI JV (c) |
|
|
(0.2) |
|
|
(0.2) |
|
|
(1.3) |
|
|
(0.2) |
|||
|
Busy Bee JV (d) |
|
|
- |
|
|
- |
|
|
(0.1) |
|
|
0.1 |
|||
|
Electric Cart Watersound JV (e) |
|
|
- |
|
|
0.1 |
|
|
- |
|
|
- |
|||
|
Watersound Management JV |
|
|
- |
|
|
- |
|
|
0.1 |
|
|
0.1 |
|||
|
Total equity in income from unconsolidated joint ventures |
|
$ |
7.5 |
|
$ |
5.4 |
|
$ |
17.7 |
|
$ |
12.8 |
|||
| (a) | During the three months ended June 30, 2025 and 2024, the Latitude Margaritaville Watersound JV completed 137 and 163 home sale transactions, respectively. During the six months ended June 30, 2025 and 2024, the Latitude Margaritaville Watersound JV completed 329 and 340 home sale transactions, respectively. |
| (b) | The community opened in March 2024 and is currently under lease-up. |
| (c) | The hotel opened in April 2024. Activity primarily includes start-up, depreciation and interest expenses for the project. |
| (d) | Includes changes in the fair value of derivatives related to interest rate swaps entered into by the Busy Bee JV. |
| (e) | An additional sales showroom located in the Watersound Town Center opened in June 2024. |
Other Expense, Net
Other expense, net primarily includes other income and expense items as detailed in the table below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||
|
|
|
2025 |
2024 |
2025 |
2024 |
|||||||
|
|
|
In millions |
||||||||||
|
Miscellaneous expense, net |
|
$ |
(0.2) |
|
$ |
(0.1) |
|
$ |
(0.5) |
|
$ |
(0.5) |
|
Other expense, net |
|
$ |
(0.2) |
|
$ |
(0.1) |
|
$ |
(0.5) |
|
$ |
(0.5) |
Other expense, net for the three and six months ended June 30, 2025 and 2024 were comparable.
Income Tax Expense
Income tax expense was $9.9 million during the three months ended June 30, 2025, as compared to $8.3 million during the same period in 2024. Our effective tax rate was 25.0% for the three months ended June 30, 2025, as compared to 25.3% during the same period in 2024.
Income tax expense was $15.8 million during the six months ended June 30, 2025, as compared to $13.0 million during the same period in 2024. Our effective tax rate was 25.3% for the six months ended June 30, 2025, as compared to 25.2% during the same period in 2024.
Our effective rate for the three and six months ended June 30, 2025 and 2024, differed from the federal statutory rate of 21.0% primarily due to state income taxes, tax credits, nontaxable or nondeductible and other differences. See Note 11. Income Taxes for additional information.
Segment Results
Residential
The table below sets forth the consolidated results of operations of our residential segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||
|
|
|
2025 |
2024 |
2025 |
2024 |
|||||||
|
|
|
In millions |
||||||||||
|
Revenue: |
|
|
|
|
||||||||
|
Real estate revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential real estate revenue |
|
$ |
35.8 |
|
$ |
28.3 |
|
$ |
66.2 |
|
$ |
57.1 |
|
Other revenue |
|
2.3 |
|
3.4 |
|
4.8 |
|
5.4 |
||||
|
Total real estate revenue |
|
|
38.1 |
|
|
31.7 |
|
|
71.0 |
|
|
62.5 |
|
Leasing revenue |
|
|
- |
|
|
- |
|
|
0.1 |
|
|
- |
|
Total revenue |
|
38.1 |
|
31.7 |
|
71.1 |
|
62.5 |
||||
|
Expenses: |
|
|
|
|
||||||||
|
Cost of real estate and other revenue |
|
21.1 |
|
15.8 |
|
39.1 |
|
30.8 |
||||
|
Other operating expenses |
|
1.2 |
|
1.2 |
|
2.4 |
|
2.3 |
||||
|
Depreciation, depletion and amortization |
|
0.1 |
|
0.1 |
|
0.1 |
|
0.1 |
||||
|
Total expenses |
|
22.4 |
|
17.1 |
|
41.6 |
|
33.2 |
||||
|
Operating income |
|
15.7 |
|
14.6 |
|
29.5 |
|
29.3 |
||||
|
Other income (expense): |
|
|
|
|
||||||||
|
Investment income, net |
|
|
0.4 |
|
|
0.4 |
|
|
0.9 |
|
|
0.8 |
|
Interest expense |
|
(0.1) |
|
(0.1) |
|
(0.2) |
|
(0.2) |
||||
|
Equity in income from unconsolidated joint ventures |
|
|
8.4 |
|
|
6.5 |
|
|
21.1 |
|
|
14.8 |
|
Other income, net |
|
0.1 |
|
0.1 |
|
0.2 |
|
0.1 |
||||
|
Total other income, net |
|
8.8 |
|
6.9 |
|
22.0 |
|
15.5 |
||||
|
Income before income taxes |
|
$ |
24.5 |
|
$ |
21.5 |
|
$ |
51.5 |
|
$ |
44.8 |
Three months ended June 30, 2025 compared to the three months ended June 30, 2024
The following table sets forth our consolidated residential real estate revenue and cost of revenue activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2025 |
|
Three Months Ended June 30, 2024 |
|||||||||||||||||||||||
|
|
Unit |
|
|
Cost of |
Gross |
Gross |
|
Units |
|
|
Cost of |
Gross |
Gross |
||||||||||||||
|
|
|
Sold |
|
Revenue |
|
Revenue |
|
Profit |
|
Margin |
|
Sold |
|
Revenue |
|
Revenue |
|
Profit |
|
Margin |
|||||||
|
|
|
Dollars in millions |
|||||||||||||||||||||||||
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
225 |
|
$ |
30.3 |
|
$ |
16.4 |
|
$ |
13.9 |
45.9 |
% |
186 |
|
$ |
28.3 |
|
$ |
13.5 |
|
$ |
14.8 |
|
52.3 |
% |
||
|
Homes |
10 |
|
|
5.5 |
|
|
3.5 |
|
|
2.0 |
36.4 |
% |
N/A |
|
- |
|
- |
|
- |
- |
% |
||||||
|
Total consolidated |
235 |
|
$ |
35.8 |
|
$ |
19.9 |
|
$ |
15.9 |
44.4 |
% |
186 |
|
$ |
28.3 |
|
$ |
13.5 |
|
$ |
14.8 |
52.3 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes (a) |
|
137 |
|
|
|
|
|
|
|
|
|
|
|
|
163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated and unconsolidated |
|
372 |
|
|
|
|
|
|
|
|
|
|
|
|
349 |
|
|
|
|
|
|
|
|
|
|
|
|
| (a) | Includes homes sold by the Latitude Margaritaville Watersound JV, which is unconsolidated and is accounted for using the equity method. See Note 4. Joint Venturesfor additional information. |
The following discussion sets forth details of the consolidated results of operations of our residential segment.
Homesites. Revenue from homesite sales increased $2.0 million, or 7.1%, during the three months ended June 30, 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 June 30, 2025 and 2024, the average base revenue, excluding homesite residuals, per homesite sold was approximately $122,000 and $140,000, respectively, due to the mix of sales from different communities. Revenue includes estimated homesite residuals of $1.2 million and $0.5 million during the three months ended June 30, 2025 and 2024, respectively. The increase 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 45.9% during the three months ended June 30, 2025, as compared to 52.3% during the same period in 2024, primarily due to the cost, 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 June 30, 2025, we sold ten completed townhomes within our Watersound Origins community for a total of $5.5 million, resulting in a gross profit margin of 36.4%.
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 $0.9 million, during the three months ended June 30, 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 $1.9 million during the three months ended June 30, 2025, as compared to the same period in 2024. The increase was due to a higher average sales price and margin per home sold, partially offset by the decreased volume of home sale transactions during the current period related to our unconsolidated Latitude Margaritaville Watersound JV. The Latitude Margaritaville Watersound JV completed 137 home sale transactions during the three months ended June 30, 2025, compared to 163 home sale transactions during the same period in 2024. See Note 4. Joint Ventures for additional information.
Six months ended June 30, 2025 compared to the six months ended June 30, 2024
The following table sets forth our consolidated residential real estate revenue and cost of revenue activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2025 |
|
Six Months Ended June 30, 2024 |
|||||||||||||||||||||||
|
|
Units |
|
|
Cost of |
Gross |
Gross |
|
Units |
|
|
Cost of |
Gross |
Gross |
||||||||||||||
|
|
|
Sold |
|
Revenue |
|
Revenue |
|
Profit |
|
Margin |
|
Sold |
|
Revenue |
|
Revenue |
|
Profit |
|
Margin |
|||||||
|
|
|
Dollars in millions |
|
||||||||||||||||||||||||
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homesites |
|
474 |
|
$ |
60.7 |
|
$ |
33.0 |
|
$ |
27.7 |
|
45.6 |
% |
402 |
|
$ |
57.1 |
|
$ |
27.9 |
|
$ |
29.2 |
|
51.1 |
% |
|
Homes |
10 |
|
|
5.5 |
|
|
3.5 |
|
|
2.0 |
|
36.4 |
% |
N/A |
|
|
- |
|
|
- |
|
|
- |
|
- |
% |
|
|
Total consolidated |
484 |
|
$ |
66.2 |
|
$ |
36.5 |
|
$ |
29.7 |
44.9 |
% |
402 |
|
$ |
57.1 |
|
$ |
27.9 |
|
$ |
29.2 |
51.1 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Homes (a) |
|
329 |
|
|
|
|
|
|
|
|
|
|
|
|
340 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consolidated and unconsolidated |
|
813 |
|
|
|
|
|
|
|
|
|
|
|
|
742 |
|
|
|
|
|
|
|
|
|
|
|
|
| (a) | Includes homes sold by the Latitude Margaritaville Watersound JV, which is unconsolidated and is accounted for using the equity method. See Note 4. Joint Venturesfor additional information. |
The following discussion sets forth details of the consolidated results of operations of our residential segment.
Homesites. Revenue from homesite sales increased $3.6 million, or 6.3%, during the six months ended June 30, 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 six months ended June 30, 2025 and 2024, the average base revenue, excluding homesite residuals, per homesite sold was approximately $118,000 and $128,000, respectively, due to the mix of sales from different communities. Revenue includes estimated homesite residuals of $2.4 million and $2.6 million during the six months ended June 30, 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 six months ended June 30, 2025, as compared to 51.1% during the same period in 2024, primarily due to the cost, 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 six months ended June 30, 2025, we sold ten completed townhomes within our Watersound Origins community for a total of $5.5 million, resulting in a gross profit margin of 36.4%.
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 $1.0 million and $1.6 million, during the six months ended June 30, 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 $6.3 million during the six months ended June 30, 2025, as compared to the same period in 2024. The increase
was due to a higher average sales price and margin per home sold, partially offset by the decreased volume of home sale transactions during the current period related to our unconsolidated Latitude Margaritaville Watersound JV. The Latitude Margaritaville Watersound JV completed 329 home sale transactions during the six months ended June 30, 2025, compared to 340 home sale transactions during the same period in 2024. See Note 4. Joint Ventures for additional information.
Hospitality
The table below sets forth the consolidated results of operations of our hospitality segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||
|
|
|
2025 |
2024 |
2025 |
2024 |
|||||||
|
|
|
In millions |
||||||||||
|
Revenue: |
|
|
|
|
||||||||
|
Hospitality revenue |
|
$ |
68.8 |
|
$ |
62.3 |
|
$ |
108.4 |
|
$ |
101.6 |
|
Leasing revenue |
|
|
1.0 |
|
|
0.9 |
|
|
1.9 |
|
|
1.7 |
|
Real estate revenue |
|
|
1.4 |
|
|
- |
|
|
1.4 |
|
|
- |
|
Total revenue |
|
|
71.2 |
|
|
63.2 |
|
|
111.7 |
|
|
103.3 |
|
Expenses: |
|
|
|
|
||||||||
|
Cost of hospitality revenue |
|
42.3 |
|
37.9 |
|
74.7 |
|
68.2 |
||||
|
Cost of leasing revenue |
|
0.7 |
|
0.9 |
|
1.2 |
|
1.5 |
||||
|
Cost of real estate revenue |
|
|
0.8 |
|
|
- |
|
|
0.8 |
|
|
- |
|
Other operating expenses |
|
0.4 |
|
0.4 |
|
0.8 |
|
0.8 |
||||
|
Depreciation, depletion and amortization |
|
7.2 |
|
6.6 |
|
14.4 |
|
13.3 |
||||
|
Total expenses |
|
51.4 |
|
45.8 |
|
91.9 |
|
83.8 |
||||
|
Operating income |
|
19.8 |
|
17.4 |
|
19.8 |
|
19.5 |
||||
|
Other expense: |
|
|
|
|
||||||||
|
Interest expense |
|
|
(2.7) |
|
|
(3.0) |
|
|
(5.3) |
|
|
(6.0) |
|
Other income (expense), net |
|
- |
|
0.1 |
|
(0.1) |
|
(0.3) |
||||
|
Total other expense, net |
|
(2.7) |
|
(2.9) |
|
(5.4) |
|
(6.3) |
||||
|
Income before income taxes |
|
$ |
17.1 |
|
$ |
14.5 |
|
$ |
14.4 |
|
$ |
13.2 |
Three months ended June 30, 2025 compared to the three months ended June 30, 2024
The following table sets forth details of our hospitality segment consolidated revenue and gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2025 |
|
|
Three Months Ended June 30, 2024 |
|||||||||||||
|
|
|
|
|
|
Gross |
|
Gross |
|
|
|
|
|
Gross |
|
Gross |
|
||
|
|
|
Revenue |
|
Profit |
|
Margin |
|
|
Revenue |
|
Profit |
|
Margin |
|||||
|
|
|
In millions |
||||||||||||||||
|
Clubs (a) |
|
$ |
25.2 |
|
$ |
10.9 |
43.3 |
% |
|
$ |
21.6 |
|
$ |
9.7 |
44.9 |
% |
||
|
Hotels |
|
|
38.9 |
|
|
14.6 |
|
37.5 |
% |
|
|
36.5 |
|
|
13.4 |
|
36.7 |
% |
|
Other |
|
4.7 |
|
1.0 |
21.3 |
% |
|
4.2 |
|
1.3 |
31.0 |
% |
||||||
|
Total |
|
$ |
68.8 |
|
$ |
26.5 |
38.5 |
% |
|
$ |
62.3 |
|
$ |
24.4 |
39.2 |
% |
||
| (a) | Includes the Camp Creek Inn due to its proximity and guest access to Watersound Club amenities. |
Revenue from our clubs increased $3.6 million, or 16.7%, during the three months ended June 30, 2025, as compared to the same period in 2024. The increase in revenue was due to an increase in membership dues, membership ancillary spend, lodging related to the Camp Creek Inn, as well as The Third golf course, which opened in November 2024 and the renovated Shark's Tooth clubhouse, which reopened in February 2025. Our clubs gross margin was 43.3% during the three months ended June 30, 2025, compared to 44.9% during the same period in 2024. The decrease in gross margin during the current period was primarily due to ongoing operating costs for The Third golf course and the Shark's Tooth clubhouse.
Revenue from our hotel operations increased $2.4 million, or 6.6%, during the three months ended June 30, 2025, as compared to the same period in 2024. Our hotels gross margin was 37.5% for the three months ended June 30, 2025, compared to 36.7% during the same period in 2024. The increase in revenue and gross margin was primarily due to the timing of holidays and school breaks.
Revenue from other hospitality operations increased $0.5 million, or 11.9%, during the three months ended June 30, 2025, as compared to the same period in 2024, primarily due to an increase in revenue related to marina operations. Our other hospitality operations gross margin was 21.3% during the three months ended June 30, 2025, compared to 31.0% 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.
Real estate revenue during the three months ended June 30, 2025, includes the sale of a hospitality property for $1.4 million, resulting in a gross profit of $0.6 million (or gross margin of 42.9%).
Other operating expenses include salaries and benefits, professional fees and other administrative expenses.
The increase of $0.6 million in depreciation, depletion and amortization expense during the three months ended June 30, 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 June 30, 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.
Six months ended June 30, 2025 compared to the six months ended June 30, 2024
The following table sets forth details of our hospitality segment consolidated revenue and gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2025 |
|
|
Six Months Ended June 30, 2024 |
|||||||||||||
|
|
|
|
|
|
Gross |
|
Gross |
|
|
|
|
|
Gross |
|
Gross |
|
||
|
|
|
Revenue |
|
Profit |
|
Margin |
|
|
Revenue |
|
Profit |
|
Margin |
|||||
|
|
|
Dollars in millions |
||||||||||||||||
|
Clubs (a) |
|
$ |
44.8 |
|
$ |
18.4 |
41.1 |
% |
|
$ |
40.6 |
|
$ |
17.8 |
43.8 |
% |
||
|
Hotels |
|
|
56.7 |
|
|
14.4 |
|
25.4 |
% |
|
|
54.5 |
|
|
13.9 |
|
25.5 |
% |
|
Other |
|
|
6.9 |
|
|
0.9 |
|
13.0 |
% |
|
|
6.5 |
|
|
1.7 |
|
26.2 |
% |
|
Total |
|
$ |
108.4 |
|
$ |
33.7 |
31.1 |
% |
|
$ |
101.6 |
|
$ |
33.4 |
32.9 |
% |
||
| (a) | Includes the Camp Creek Inn due to its proximity and guest access to Watersound Club amenities. |
Revenue from our clubs increased $4.2 million, or 10.3%, during the six months ended June 30, 2025, as compared to the same period in 2024. The increase in revenue was due to an increase in membership dues, membership ancillary spend, lodging related to the Camp Creek Inn, 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 June 30, 2025, Watersound Club had 3,551 members, compared with 3,571 members as of June 30, 2024, a net decrease of 20 members. Our clubs gross margin was 41.1% during the six months ended June 30, 2025, compared to 43.8% during the same period in 2024. The decrease in gross margin was primarily due to ongoing operating costs for The Third golf course and reopening and ongoing operating costs of the Shark's Tooth clubhouse during the current period.
Revenue from our hotel operations increased $2.2 million, or 4.0%, during the six months ended June 30, 2025, as compared to the same period in 2024. Our hotels gross margin was 25.4% for the six months ended June 30, 2025, comparable to 25.5% during the same period in 2024.
As of both June 30, 2025 and 2024, we had 1,053 operational hotel rooms (excluding 245 hotel rooms related to unconsolidated JVs).
Revenue from other hospitality operations increased $0.4 million, or 6.2%, during the six months ended June 30, 2025, as compared to the same period in 2024, primarily due to an increase in revenue related to marina operations. Our other hospitality operations gross margin was 13.0% during the six months ended June 30, 2025, compared to 26.2% 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 11.8%, during the six months ended June 30, 2025, as compared to the same period in 2024, primarily due to increased occupancy at our marinas.
Real estate revenue during the six months ended June 30, 2025, includes the sale of a hospitality property for $1.4 million, resulting in a gross profit of $0.6 million (or gross margin of 42.9%).
Other operating expenses include salaries and benefits, professional fees and other administrative expenses.
The increase of $1.1 million in depreciation, depletion and amortization expense during the six months ended June 30, 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 $0.7 million in interest expense during the six months ended June 30, 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.
Commercial
The table below sets forth the consolidated results of operations of our commercial segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|||||||||
|
|
|
2025 |
2024 |
2025 |
2024 |
|||||||
|
|
|
In millions |
||||||||||
|
Revenue: |
|
|
|
|
||||||||
|
Leasing revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial leasing revenue |
|
$ |
7.3 |
|
$ |
5.9 |
|
$ |
14.6 |
|
$ |
11.8 |
|
Multi-family leasing revenue |
|
|
5.8 |
|
|
5.8 |
|
|
11.6 |
|
|
11.4 |
|
Senior living leasing revenue |
|
|
2.2 |
|
|
1.9 |
|
|
4.2 |
|
|
3.9 |
|
Total leasing revenue |
|
|
15.3 |
|
|
13.6 |
|
|
30.4 |
|
|
27.1 |
|
Real estate revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and forestry real estate revenue |
|
1.9 |
|
0.7 |
|
5.1 |
|
2.1 |
||||
|
Timber revenue |
|
|
1.3 |
|
|
1.1 |
|
|
2.5 |
|
|
2.3 |
|
Total real estate revenue |
|
|
3.2 |
|
|
1.8 |
|
|
7.6 |
|
|
4.4 |
|
Total revenue |
|
18.5 |
|
15.4 |
|
38.0 |
|
31.5 |
||||
|
Expenses: |
|
|
|
|||||||||
|
Cost of leasing revenue |
|
6.8 |
|
6.3 |
|
13.5 |
|
12.8 |
||||
|
Cost of real estate revenue |
|
1.1 |
|
0.3 |
|
1.4 |
|
0.8 |
||||
|
Other operating expenses |
|
1.1 |
|
0.6 |
|
2.3 |
|
1.8 |
||||
|
Depreciation, depletion and amortization |
|
4.6 |
|
4.5 |
|
9.4 |
|
8.9 |
||||
|
Total expenses |
|
13.6 |
|
11.7 |
|
26.6 |
|
24.3 |
||||
|
Operating income |
|
4.9 |
|
3.7 |
|
11.4 |
|
7.2 |
||||
|
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(2.8) |
|
(3.2) |
|
(5.6) |
|
(6.4) |
||||
|
Equity in loss from unconsolidated joint ventures |
|
|
(0.9) |
|
|
(1.1) |
|
|
(3.4) |
|
|
(2.1) |
|
Other expense, net |
|
(0.2) |
|
(0.2) |
|
(0.4) |
|
(0.4) |
||||
|
Total other expense, net |
|
(3.9) |
|
(4.5) |
|
(9.4) |
|
(8.9) |
||||
|
Income (loss) before income taxes |
|
$ |
1.0 |
|
$ |
(0.8) |
|
$ |
2.0 |
|
$ |
(1.7) |
Three months ended June 30, 2025 compared to the three months ended June 30, 2024
The following table sets forth details of our commercial segment consolidated revenue and gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2025 |
|
|
Three Months Ended June 30, 2024 |
|||||||||||||
|
|
|
|
|
|
Gross |
|
Gross |
|
|
|
|
|
Gross |
|
Gross |
|
||
|
|
|
Revenue |
|
Profit |
|
Margin |
|
|
Revenue |
|
Profit |
|
Margin |
|||||
|
|
|
In millions |
|
|||||||||||||||
|
Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial leasing |
|
$ |
7.3 |
|
$ |
4.9 |
67.1 |
% |
|
$ |
5.9 |
|
$ |
3.7 |
62.7 |
% |
||
|
Multi-family leasing |
|
|
5.8 |
|
|
2.8 |
48.3 |
% |
|
|
5.8 |
|
|
3.0 |
51.7 |
% |
||
|
Senior living leasing |
|
|
2.2 |
|
|
0.8 |
|
36.4 |
% |
|
|
1.9 |
|
|
0.6 |
|
31.6 |
% |
|
Total leasing |
|
|
15.3 |
|
|
8.5 |
|
55.6 |
% |
|
|
13.6 |
|
|
7.3 |
|
53.7 |
% |
|
Real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and forestry real estate |
|
|
1.9 |
|
|
1.0 |
|
52.6 |
% |
|
|
0.7 |
|
|
0.7 |
|
100.0 |
% |
|
Timber |
|
|
1.3 |
|
|
1.1 |
|
84.6 |
% |
|
|
1.1 |
|
|
0.8 |
|
72.7 |
% |
|
Total real estate |
|
|
3.2 |
|
|
2.1 |
|
65.6 |
% |
|
|
1.8 |
|
|
1.5 |
|
83.3 |
% |
|
Total |
|
$ |
18.5 |
|
$ |
10.6 |
57.3 |
% |
|
$ |
15.4 |
|
$ |
8.8 |
57.1 |
% |
||
The following discussion sets forth details of the consolidated results of operations of our commercial segment.
Total leasing revenue increased $1.7 million, or 12.5%, during the three months ended June 30, 2025, as compared to the same period in 2024. The increase was primarily due to additional commercial property leases, as well as other leases. Total leasing gross margin during the three months ended June 30, 2025 was 55.6%, as compared to 53.7% during the same period in 2024. The increase in leasing gross margin was primarily due to additional leases in the current period.
During the three months ended June 30, 2025, we had four commercial and forestry real estate sales of approximately 11 acres for $1.9 million, resulting in a gross margin of approximately 52.6%. During the three months ended June 30, 2024, we had a commercial and forestry real estate sale of approximately 168 acres for $0.7 million, with de minimis cost of revenue resulting in a gross margin of approximately 100.0%.
Timber revenue increased $0.2 million, or 18.2%, to $1.3 million during the three months ended June 30, 2025, as compared to $1.1 million during the same period in 2024. The increase was primarily due to an increase in prices in the current period. There were 62,000 tons of wood products sold at an average price per ton of $19.64 during the three months ended June 30, 2025, as compared to 67,000 tons of wood products sold at an average price per ton of $14.09, during the same period in 2024. Timber gross margin was 84.6% during the three months ended June 30, 2025, as compared to 72.7% during the same period in 2024. The increase was primarily due to higher prices in the current period.
Other operating expenses include salaries and benefits, property taxes, CDD assessments, professional fees, marketing, project administration and other administrative expenses.
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 June 30, 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 $0.9 million during the three months ended June 30, 2025, as compared to $1.1 million for the same period in 2024. The three months ended June 30, 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.
Six months ended June 30, 2025 compared to the six months ended June 30, 2024
The following table sets forth details of our commercial segment consolidated revenue and gross profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2025 |
|
|
Six Months Ended June 30, 2024 |
|||||||||||||
|
|
|
|
|
|
Gross |
|
Gross |
|
|
|
|
|
Gross |
|
Gross |
|
||
|
|
|
Revenue |
|
Profit |
|
Margin |
|
|
Revenue |
|
Profit |
|
Margin |
|||||
|
|
|
Dollars in millions |
||||||||||||||||
|
Leasing |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial leasing |
|
$ |
14.6 |
|
$ |
9.7 |
66.4 |
% |
|
$ |
11.8 |
|
$ |
7.5 |
63.6 |
% |
||
|
Multi-family leasing |
|
|
11.6 |
|
|
5.8 |
50.0 |
% |
|
|
11.4 |
|
|
5.7 |
50.0 |
% |
||
|
Senior living leasing |
|
|
4.2 |
|
|
1.4 |
|
33.3 |
% |
|
|
3.9 |
|
|
1.1 |
|
28.2 |
% |
|
Total leasing |
|
|
30.4 |
|
|
16.9 |
|
55.6 |
% |
|
|
27.1 |
|
|
14.3 |
|
52.8 |
% |
|
Real estate |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and forestry real estate |
|
|
5.1 |
|
|
4.1 |
|
80.4 |
% |
|
|
2.1 |
|
|
1.7 |
|
81.0 |
% |
|
Timber |
|
|
2.5 |
|
|
2.1 |
|
84.0 |
% |
|
|
2.3 |
|
|
1.9 |
|
82.6 |
% |
|
Total real estate |
|
|
7.6 |
|
|
6.2 |
|
81.6 |
% |
|
|
4.4 |
|
|
3.6 |
|
81.8 |
% |
|
Total |
|
$ |
38.0 |
|
$ |
23.1 |
60.8 |
% |
|
$ |
31.5 |
|
$ |
17.9 |
56.8 |
% |
||
The following discussion sets forth details of the consolidated results of operations of our commercial segment.
Total leasing revenue increased $3.3 million, or 12.2%, during the six months ended June 30, 2025, as compared to the same period in 2024. The increase was primarily due to additional commercial property leases, as well as other leases. Total leasing gross margin during the six months ended June 30, 2025 was 55.6%, as compared to 52.8% during the same period in 2024. The increase in leasing gross margin was primarily due to additional leases in the current period. As of June 30, 2025, we had net rentable square feet of approximately 1,177,000, of which approximately 1,122,000 square feet were under lease. As of June 30, 2024, we had net rentable square feet of approximately 1,100,000, of which approximately 1,058,000 square feet were under lease. As of June 30, 2025 and 2024, our consolidated entities had 1,225 and 1,235 multi-family and senior living units, respectively, of which 1,114 were leased as of June 30, 2025, compared to 1,070 leased as of June 30, 2024 (excludes 148 senior living units for the unconsolidated Watersound Fountains Independent Living JV).
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 six months ended June 30, 2025, we had six commercial and forestry real estate sales of approximately 144 acres for $5.1 million, resulting in a gross margin of approximately 80.4%. During the six months ended June 30, 2024, we had three commercial and forestry real estate sales of approximately 243 acres for $2.1 million, resulting in a gross margin of approximately 81.0%.
Timber revenue increased $0.2 million, or 8.7%, to $2.5 million during the six months ended June 30, 2025, as compared to $2.3 million during the same period in 2024. The increase was primarily due to an increase in prices in the current period. There were 135,000 tons of wood products sold at an average price per ton of $16.90 during the six months ended June 30, 2025, as compared to 142,000 tons of wood products sold at an average price per ton of $14.48, during the same period in 2024. Timber gross margin was 84.0% during the six months ended June 30, 2025, as compared to 82.6% during the same period in 2024. The increase was primarily due to higher prices in the current period.
Other operating expenses include salaries and benefits, property taxes, CDD assessments, professional fees, marketing, project administration and other administrative expenses.
The increase of $0.5 million in depreciation, depletion and amortization expense during the six months ended June 30, 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 $0.8 million in interest expense during the six months ended June 30, 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 $3.4 million during the six months ended June 30, 2025, as compared to $2.1 million for the same period in 2024. The six months ended June 30, 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 six months ended June 30, 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 June 30, 2025, we had cash and cash equivalents of $88.2 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 interest payments on our long-term debt, authorized stock repurchases and authorized dividends for the next twelve months.
During the six months ended June 30, 2025, we invested a total of $69.2 million for capital expenditures, which includes $51.4 million for our residential segment, $7.2 million for our hospitality segment, $10.1 million for our commercial segment and $0.5 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 June 30, 2025, we had a total of $37.3 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 June 30, 2025 and December 31, 2024, we had various loans outstanding totaling $432.4 million and $442.7 million, respectively, with maturities from November 2025 through March 2064. As of June 30, 2025, the weighted average effective interest rate of total outstanding debt was 4.8%, of which 74.6% includes fixed or swapped interest rates, and the average remaining life was 18.7 years. As of June 30, 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 June 30, 2025 and December 31, 2024, $39.8 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 are in the process of refinancing the PPN JV Loan.
In 2018, the Pier Park Crossings JV entered into a $36.6 million loan, insured by HUD, as amended. As of June 30, 2025 and December 31, 2024, $33.9 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 June 30, 2025 and December 31, 2024, $19.3 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. Our liability as guarantor under the loan has been reduced to 50% of the outstanding principal balance, which requires the borrower to maintain certain debt service coverage requirements. 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 June 30, 2025 and December 31, 2024, $3.7 million and $5.0 million, respectively, 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 2020, a wholly-owned subsidiary of ours entered into a $15.3 million loan, which is guaranteed by us. As of June 30, 2025 and December 31, 2024, $11.0 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 six months ended June 30, 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 June 30, 2025 and December 31, 2024, $50.4 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 June 30, 2025 and December 31, 2024, $15.2 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 June 30, 2025 and December 31, 2024, $13.9 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 can 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 June 30, 2025 and December 31, 2024, $27.7 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. As of June 30, 2025, we incurred $0.6 million of loan costs due to the refinance. The six months ended June 30, 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 June 30, 2025 and December 31, 2024, $27.1 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 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 June 30, 2025 and December 31, 2024, $6.8 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 June 30, 2025 and December 31, 2024, $19.4 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 June 30, 2025 and December 31, 2024, $42.8 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, the Pier Park Crossings Phase II JV refinanced into a $22.9 million loan, insured by HUD. As of June 30, 2025 and December 31, 2024, $21.6 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% - 7% 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 2022, a wholly-owned subsidiary of ours entered into a $13.7 million loan, which is guaranteed by us. As of both June 30, 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 June 30, 2025 and December 31, 2024, $33.3 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 June 30, 2025 and December 31, 2024, $51.6 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% - 8% 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 $2.6 million as of June 30, 2025. Total outstanding CDD debt related to our land holdings was $8.9 million as of June 30, 2025, which is comprised of $7.3 million at the SouthWood community, $1.5 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 June 30, 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.
During the three months ended June 30, 2025, we repurchased 235,400 shares of our common stock outstanding at an average repurchase price of $44.66, per share, for an aggregate purchase price of $10.5 million, excluding the excise tax on stock repurchases in excess of issuances as a result of the IRA. During the six months ended June 30, 2025, we repurchased 359,014 shares of our common stock outstanding at an average repurchase price of $45.13, per share, for an aggregate purchase price of $16.2 million, excluding the excise tax on stock repurchases in excess of issuances as a result of the IRA. During the three and six months ended June 30, 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 June 30, 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 $63.2 million and $53.1 million, respectively, as well as standby letters of credit in the amount of $0.1 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 $9.7 million and $6.4 million as of June 30, 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:
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|||||
|
|
|
2025 |
2024 |
|||
|
|
|
In millions |
||||
|
Net cash provided by operating activities |
|
$ |
60.1 |
|
$ |
50.4 |
|
Net cash used in investing activities |
|
(15.9) |
|
(28.5) |
||
|
Net cash used in financing activities |
|
(43.7) |
|
(21.4) |
||
|
Net increase in cash, cash equivalents and restricted cash |
|
0.5 |
|
0.5 |
||
|
Cash, cash equivalents and restricted cash at beginning of the period |
|
96.3 |
|
90.8 |
||
|
Cash, cash equivalents and restricted cash at end of the period |
|
$ |
96.8 |
|
$ |
91.3 |
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 planned to be sold, including developed and undeveloped assets. 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 $60.1 million during the six months ended June 30, 2025, as compared to $50.4 million during the same period in 2024. Net income was $46.4 million during the six months ended June 30, 2025, as compared to $37.6 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 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 six months ended June 30, 2025, net cash used in investing activities was $15.9 million, which included capital expenditures for operating property and property and equipment of $14.3 million and capital contributions to unconsolidated joint ventures of $2.1 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 six months ended June 30, 2024, net cash used in investing activities was $28.5 million, which included capital expenditures for operating property and property and equipment of $28.2 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 $0.2 million.
Cash Flows from Financing Activities
Net cash used in financing activities during the six months ended June 30, 2025 was $43.7 million, compared to $21.4 million during the same period in 2024. Net cash used in financing activities during the six months ended June 30, 2025, included principal payments for debt of $38.0 million, dividends paid of $16.3 million, repurchase of common stock, including excise tax of $16.3 million, capital distributions to non-controlling interest of $0.5 million and debt issuance costs of $0.4 million, partially offset by borrowings on debt of $27.8 million. Net cash used in financing activities during the six months ended June 30, 2024, included dividends paid of $14.0 million, principal payments for debt of $7.0 million, capital distributions to non-controlling interest of $0.4 million and principal payments for finance leases of $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 second 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.
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; higher insurance costs and our ability to obtain adequate insurance coverage
for our properties; financial institution disruptions; supply chain disruptions; geopolitical conflicts and political uncertainty and the corresponding impact on the global economy; the imposition of tariffs and uncertainty regarding trade policies; changes in consumer sentiment and confidence that may impact demand across our segments; 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 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 (including the One Big Beautiful Bill Act), 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.
The St. Joe Company published this content on July 23, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on July 23, 2025 at 20:53 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]