Investment in Real Estate

3 Months Ended

Mar. 31, 2013

Investment in Real Estate

2. Investment in Real Estate

Real estate by property type and segment includes the following:

	March 31, 2013		December 31, 2012
Operating property:
Residential real estate	$	2,786	$	2,792
Resorts, leisure and leasing operations		153,048		152,906
Forestry		55,334		54,984
Rural land		139		139
Other		45		179
Total operating property		211,352		211,000
Development property:
Residential real estate		133,000		133,835
Commercial real estate		57,018		59,851
Resorts, leisure and leasing operations		5,129		351
Rural land		5,768		5,768
Corporate		2,280		2,268
Total development property		203,195		202,073
Investment property:
Commercial real estate		700		700
Resorts, leisure and leasing operations		255		255
Forestry		953		953
Other		3,208		3,216
Total investment property		5,116		5,124
Investment in unconsolidated affiliates(1)		2,210		2,222
Total real estate investments		421,873		420,419
Less: Accumulated depreciation		50,938		49,772
Investment in real estate	$	370,935	$	370,647

⁽¹⁾ Recorded in the Company’s resorts, leisure and leasing operation’s segment.

Operating property includes property that the Company uses for daily operations and activities. The resorts, leisure and leasing operating property includes the WaterColor Inn, golf courses, marinas, and property developed by the Company and used for residential and commercial rental purposes. Forestry operating property includes the Company’s timberlands.

Development property consists of real estate land on which we have incurred development costs. Residential real estate includes mixed-use resort, primary and seasonal residential communities and includes costs directly associated with the land, development and construction of these communities, including common development costs such as roads, sewers, and amenities and indirect costs such as development overhead, capitalized interest, marketing and project administration. Commercial real estate includes land for commercial and industrial uses within large and small scale commerce parks, including land holdings near the Northwest Florida Beaches International Airport, as well as a wide range of multi-family rental projects and includes costs directly associated with the land and development costs, which also include common development costs such as roads and sewers. Rural land includes land with minimal development costs. Resorts, leisure and leasing development property primarily includes the land and construction under development for the consolidated joint venture at Pier Park North.

The capitalization period relating to direct and indirect development project costs is the period in which activities necessary to ready a property for its intended use are in progress. The period begins when such activities commence, typically when the Company begins the entitlement processes for land already owned, and ends when the asset is substantially complete and ready for its intended use. Determination of when construction of a project is substantially complete and ready for its intended use requires judgment. The Company determines when the capitalization period begins and ends through communication with project and other managers responsible for the tracking and oversight of individual projects. In the event that the activities to ready the asset for its intended use are suspended, the capitalization period will cease until such activities are resumed. If we determine not to complete a project, any previously capitalized costs are expensed in the period in which the determination is made and recovery is not deemed reasonable. During the three months ended March 31, 2013 and 2012, the Company has capitalized primary direct development costs.

Investment property includes the Company’s land held for future use that has not been allocated to a specific project.

Investment in unconsolidated affiliates reflects the Company’s investment in the East San Marco joint venture. See Note 3, Variable Interest Entities.

Impairment of Long Lived Assets

The Company reviews its long lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Long lived assets include the Company’s investments in operating, development and investment property. Some of the events or changes in circumstances that are considered by the Company as indicators of potential impairment include:

• a prolonged decrease in the market price or demand for the Company’s properties;

• a change in the expected use or development plans for the Company’s properties;

• a current period operating or cash flow loss for an operating property; and,

• an accumulation of costs in a development property that significantly exceeds its historical basis in property held long-term.

There were no events or changes in circumstances that would indicate that the carrying value of the Company’s assets would not be recoverable, and, therefore, the Company did not record any impairment charges during the three months ended March 31, 2013 and 2012.