Investment in Real Estate

12 Months Ended

Dec. 31, 2020

Investment in Real Estate

Investment in Real Estate

3. Investment in Real Estate

Real estate by property type and segment includes the following:

	December 31,		December 31,
	2020		2019
Development property:
Residential	$	116,911	$	115,384
Hospitality		51,113		12,229
Commercial		123,389		103,326
Other		2,691		2,631
Total development property		294,104		233,570
Operating property:
Residential		13,254		11,985
Hospitality		103,687		94,838
Commercial		216,439		164,589
Other		129		50
Total operating property		333,509		271,462
Less: Accumulated depreciation		75,960		74,256
Total operating property, net		257,549		197,206
Investment in real estate, net	$	551,653	$	430,776

Development property consists of land the Company is developing or intends to develop for sale or future operations and includes direct costs associated with the land, as well as development, construction and indirect costs. Residential includes residential communities such as Watersound Origins, SouthWood, WindMark Beach, as well as other communities. Hospitality development property consists of land, construction costs, development costs and improvements primarily related to the Pier Park Resort Hotel JV, Camp Creek Lifestyle Village amenity center, Homewood Suites by Hilton hotel in Panama City Beach, Florida, The Lodge 30A JV hotel and a Hilton Garden Inn near the Northwest Florida Beaches International Airport, as well as other properties. Commercial development property primarily consists of land, construction costs and development costs for commercial, multi-family, senior living and industrial uses, including the Watercrest JV, Watersound Origins Crossings JV, Watersound Town Center, land holdings

near the Northwest Florida Beaches International Airport and Port of Port St. Joe as well as other properties. Development property in the hospitality and commercial segments will be reclassified as operating property as it is placed into service.

Operating property includes the following components:

		December 31,		December 31,
		2020		2019
Land and land improvements	$	97,031	$	83,995
Buildings and building improvements		223,095		174,712
Timber		13,383		12,755
		333,509		271,462
Less: Accumulated depreciation		75,960		74,256
Total operating property, net	$	257,549	$	197,206

Operating property includes property that the Company uses for operations and activities. Residential operating property consists primarily of residential utility assets and certain rental properties. The hospitality operating property includes the WaterColor Inn, WaterSound Inn, The Powder Room, golf courses, a beach club and certain vacation rental properties. Commercial operating property includes property developed or purchased by the Company and used for retail, multi-family and commercial rental purposes, including property in the Pier Park North JV, VentureCrossings, Pier Park Crossings JV, Pier Park Crossings II JV and Beckrich Office Park as well as other properties. Commercial operating property also includes the Company’s timberlands. Operating property may be sold in the future as part of the Company’s principal real estate business.

Depreciation expense related to real estate investments was $8.3 million, $6.8 million and $6.0 million in 2020, 2019 and 2018, respectively. Depletion and amortization expense related to the Company’s timber operations was $0.4 million, $0.3 million and $0.5 million in 2020, 2019 and 2018, respectively.