Other Income (Expense), Net

9 Months Ended

Sep. 30, 2021

Other Income (Expense), Net

Other Income (Expense), Net

16. Other Income (Expense), Net

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Investment income, net
Interest and dividend income	$	—	$	6	$	13	$	1,117
Accretion income		52		13		90		60
Net realized gain (loss) on the sale of investments		—		—		17		(48)
Unrealized gain (loss) on investments, net		63		270		(1,947)		(4,633)
Interest income from investments in SPEs		2,003		2,045		6,075		6,136
Interest earned on notes receivable and other interest		213		71		565		219
Total investment income, net		2,331		2,405		4,813		2,851
Interest expense
Interest expense and amortization of discount and issuance costs for Senior Notes issued by SPE		(2,207)		(2,204)		(6,619)		(6,609)
Other interest expense		(1,907)		(1,175)		(5,020)		(3,504)
Total interest expense		(4,114)		(3,379)		(11,639)		(10,113)
Gain on contribution to equity method investment		—		—		3,290		19,615
Other income (expense), net
Accretion income from retained interest investments		392		349		1,129		1,034
Gain on insurance recovery		2,540		—		3,924		—
Loss from hurricane damage		(11)		(594)		(26)		(1,096)
Miscellaneous income, net		4,408		512		4,568		723
Other income, net		7,329		267		9,595		661
Total other income (expense), net	$	5,546	$	(707)	$	6,059	$	13,014

Investment Income, Net

Interest and dividend income includes interest income accrued or received on the Company’s investments. 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 Senior Notes issued by Northwest Florida Timber Finance, LLC, project financing, CDD debt 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, 2021 and 2020, the Company capitalized $0.2 million and $0.4 million, respectively, in interest related to projects under development or construction. During the nine months ended September 30, 2021 and 2020, the Company capitalized $0.9 million and $0.6 million, respectively, in interest related to projects under development or construction. These amounts are included within investment in real estate, net on the Company’s condensed consolidated balance sheets.

Gain on Contribution to Equity Method Investment

The Company did not have any gain on contribution to equity method investment during the three months ended September 30, 2021 and 2020. Gain on contribution to equity method investment for the nine months ended September 30, 2021, includes a gain of $0.2 million on additional infrastructure improvements contributed to the Company’s unconsolidated Latitude Margaritaville Watersound JV. The nine months ended September 30, 2021, also includes a gain of $3.1 million on land contributed to the Company’s unconsolidated Watersound Fountains Independent Living JV. Gain on contribution to equity method investment 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 nine months ended September 30, 2020, also includes a gain of $4.3 million on land and mitigation credits contributed to the Company’s unconsolidated Sea Sound Apartments JV. See Note 4. Joint Ventures for additional information.

Other Income, Net

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

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 11.5%.

During the three and nine months ended September 30, 2021, the Company had a gain on insurance recovery of $2.5 million and $3.9 million, respectively, and incurred loss from hurricane damage of less than $0.1 million, during each period, related to Hurricane Michael. During the three and nine months ended September 30, 2020, the Company did not have any gain on insurance recovery, but incurred $0.6 million and $1.1 million, respectively, of loss from hurricane damage related to Hurricane Michael. See Note 7. Hurricane Michael for additional information.

Miscellaneous income, net during the three and nine months ended September 30, 2021, includes $3.6 million the Company received from the Florida Division of Emergency Management’s Florida Timber Recovery Block Grant Program (“TRBG”) for recovery of lost income related to timber crop that was destroyed as a result of Hurricane Michael. The Company has met all requirements related to the TRBG program as of September 30, 2021. See Note 7. Hurricane Michael for additional information.