Other (Expense) Income, Net

9 Months Ended

Sep. 30, 2020

Other (Expense) Income, Net

Other Income

16. Other (Expense) Income, Net

Other (expense) income, net consists of the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Investment income, net
Interest and dividend income	$	6	$	1,637	$	1,117	$	5,752
Accretion income		13		—		60		84
Net realized gain (loss) on the sale of investments		—		28		(48)		26
Unrealized gain (loss) on investments, net		270		(1,439)		(4,633)		(1,305)
Interest income from investments in SPEs		2,045		2,047		6,136		6,143
Interest accrued on notes receivable and other interest		71		98		219		252
Total investment income, net		2,405		2,371		2,851		10,952
Interest expense
Interest expense and amortization of discount and issuance costs for Senior Notes issued by SPE		(2,204)		(2,201)		(6,609)		(6,599)
Other interest expense		(1,175)		(908)		(3,504)		(2,476)
Total interest expense		(3,379)		(3,109)		(10,113)		(9,075)
Other income (expense), net
Gain on land contribution to equity method investment		—		846		19,615		2,317
Accretion income from retained interest investments		349		335		1,034		982
Gain on insurance recovery		—		1,243		—		5,314
Loss from hurricane damage		(594)		(575)		(1,096)		(1,703)
Miscellaneous income, net		512		298		723		216
Other income, net		267		2,147		20,276		7,126
Total other (expense) income, net	$	(707)	$	1,409	$	13,014	$	9,003

Investment Income, Net

Interest and dividend income includes interest income accrued or received on the Company’s U. S. Treasury Bills, corporate debt securities, commercial paper and money market funds, and dividend income received from the Company’s investments in preferred stock. Accretion income includes the amortization of the premium or accretion of discount related to the Company’s available-for-sale securities, which is amortized based on an effective interest rate method over the term of the available-for-sale securities. Net realized gain (loss) on the sale of investments include the gains or losses recognized on the sale of available-for-sale and equity securities prior to maturity. Unrealized gain (loss) on investments, net includes unrealized gains or losses on investments - equity securities.

Interest income from investments in SPEs primarily includes interest earned on the investments held by Panama City Timber Finance Company, LLC, which is used to pay the interest expense for Senior Notes held by Northwest Florida Timber Finance, LLC.

Interest Expense

Interest expense includes interest incurred related to the Company’s CDD debt, Senior Notes issued by Northwest Florida Timber Finance, LLC, project financing and finance leases. Borrowing costs, including the discount and issuance costs for the Senior Notes issued by Northwest Florida Timber Finance, LLC, are amortized based on the effective interest method at an effective rate of 4.9%.

During the three months ended September 30, 2020 and 2019 the Company capitalized $0.4 million and $0.1 million, respectively, in interest related to projects under development. During the nine months ended September 30, 2020 and 2019 the Company capitalized $0.6 million and $0.5 million, respectively, in interest related to projects under development. These amounts are included within investment in real estate, net on the Company’s condensed consolidated balance sheets.

Other Income, Net

Other income, net primarily includes gain on land contributions, income from the Company’s retained interest investments, gain on insurance recovery, loss from hurricane damage and other income and expense items.

Other income, net for the nine months ended September 30, 2020 includes a gain of $15.3 million on land contributed to the Company’s unconsolidated Latitude Margaritaville Watersound JV. The $15.3 million gain on land contributed to the Latitude Margaritaville Watersound JV includes $16.6 million for the net present value of the land contribution, net of $1.3 million cost basis. The present value of the land contribution was based on the Company’s best estimate of the prevailing market rates for the source of credit using an imputed interest rate of 5.75% and an additional performance obligation to provide for infrastructure improvements in the vicinity of the contributed land. The nine months ended September 30, 2020 also include a gain of $4.3 million on land and mitigation credits contributed to the Company’s unconsolidated Sea Sound Apartments JV. The three and nine months ended September 30, 2019, include a gain of $0.8 million on land contributed to the Company’s unconsolidated Busy Bee JV. The nine months ended September 30, 2019, also include a gain of $1.5 million on land contributed to the Company’s unconsolidated Pier Park TPS JV. See Note 4. Joint Ventures for additional information.

The Company records the accretion of investment income from its retained interest investment over the life of the retained interest using the effective yield method with rates ranging from 3.7% to 11.2%.

During the three and nine months ended September 30, 2020, the Company did not have any gain on insurance recovery and incurred $0.6 million and $1.1 million, respectively, of loss from hurricane damage related to Hurricane Michael. During the three and nine months ended September 30, 2019, the Company had a gain on insurance recovery of $1.2 million and $5.3 million, respectively, and incurred $0.6 million and $1.7 million, respectively, of loss from hurricane damage related to Hurricane Michael. See Note 7. Hurricane Michael for additional information.