Other Income (Expense), Net

3 Months Ended

Mar. 31, 2023

Other Income (Expense), Net

Other Income (Expense), Net

16. Other Income (Expense), Net

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

	Three Months Ended
	March 31,
	2023		2022
Investment income, net
Interest, dividend and accretion income	$	461	$	100
Unrealized gain on investments, net		—		25
Interest income from investments in SPEs		2,003		2,003
Interest earned on notes receivable and other interest		457		172
Total investment income, net		2,921		2,300
Interest expense
Interest incurred for project financing and other interest expense		(3,997)		(1,944)
Interest expense and amortization of discount and issuance costs for Senior Notes issued by SPE		(2,212)		(2,209)
Total interest expense		(6,209)		(4,153)
Gain on contributions to unconsolidated joint ventures		530		482
Equity in income (loss) from unconsolidated joint ventures		3,663		(495)
Other income (expense), net
Accretion income from retained interest investments		394		417
Gain on insurance recoveries		—		723
Loss from hurricane damage		—		(32)
Miscellaneous income (expense), net		319		(1,477)
Other income (expense), net		713		(369)
Total other income (expense), net	$	1,618	$	(2,235)

Investment Income, Net

Interest, dividend and accretion income includes interest income accrued or received on the Company’s investments and 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. Unrealized gain 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 earned on the Company’s notes receivable and other interest includes interest earned on notes receivable and on the Company’s unimproved land contribution to the unconsolidated Latitude Margaritaville Watersound JV as home sales are transacted in the community. See Note 4. Joint Ventures and Note 8. Other Assets for additional information.

Interest Expense

Interest expense includes interest incurred related to the Company’s project financing, Senior Notes issued by Northwest Florida Timber Finance, LLC, CDD debt and finance leases. Interest expense also includes amortization of debt discount and premium and debt issuance costs. 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 March 31, 2023 and 2022, the Company capitalized $1.3 million and $0.3 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 Contributions to Unconsolidated Joint Ventures

Gain on contributions to unconsolidated joint ventures for the three months ended March 31, 2023 and 2022, include a gain of $0.5 million and $0.1 million, respectively, on additional infrastructure improvements contributed to the Company’s unconsolidated Latitude Margaritaville Watersound JV. The three months ended March 31, 2022, also include a gain of $0.4 million on land contributed to the Company’s unconsolidated Electric Cart Watersound JV. See Note 4. Joint Ventures for additional information.

Equity in Income (Loss) from Unconsolidated Joint Ventures

Equity in income (loss) from unconsolidated joint ventures includes the Company’s proportionate share of earnings or losses of unconsolidated JVs accounted for by the equity method. Equity in income (loss) from unconsolidated joint ventures during the three months ended March 31, 2023 and 2022, includes $3.9 million of income and $0.6 of loss, respectively, related to the Latitude Margaritaville Watersound JV. See Note 4. Joint Ventures for additional information.

Other Income (Expense), Net

Other income (expense), 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 at a rate of 7.8%. During the three months ended March 31, 2022, the Company had a gain on insurance recovery of $0.7 million and incurred loss from hurricane damage of less than $0.1 million, related to Hurricane Michael. In November 2022, the Company closed out the claim related to Hurricane Michael.

Miscellaneous income (expense), net during the three months ended March 31, 2023, includes income of $0.5 million related to a gain on retained interest investment. Miscellaneous income (expense), net during the three months ended March 31, 2022, includes $0.4 million of income received from the Pier Park CDD for repayment of subordinated notes and expenses of $1.1 million for design costs no longer pursued and $0.6 million for a homeowner’s association special assessment.