Other Income, Net

9 Months Ended

Sep. 30, 2023

Other Income, Net

Other Income, Net

16. Other Income, Net

Other income, net consists of the following:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Investment income, net
Interest, dividend and accretion income	$	826	$	355	$	2,003	$	732
Unrealized gain on investments, net		—		31		—		91
Interest income from investments in SPEs		2,003		2,003		6,009		6,009
Interest earned on notes receivable and other interest		820		346		1,741		699
Total investment income, net		3,649		2,735		9,753		7,531
Interest expense
Interest incurred for project financing and other interest expense		(6,197)		(2,516)		(15,187)		(6,322)
Interest expense and amortization of discount and issuance costs for Senior Notes issued by SPE		(2,214)		(2,211)		(6,640)		(6,629)
Total interest expense		(8,411)		(4,727)		(21,827)		(12,951)
Gain on contributions to unconsolidated joint ventures		76		1,430		633		2,001
Equity in income from unconsolidated joint ventures		8,708		2,481		18,409		3,415
Other income (expense), net
Accretion income from retained interest investments		1,099		412		2,594		1,262
Gain on insurance recoveries		—		875		—		4,186
Loss from hurricane damage		—		(7)		—		(51)
Miscellaneous income, net		51		848		738		648
Other income, net		1,150		2,128		3,332		6,045
Total other income, net	$	5,172	$	4,047	$	10,300	$	6,041

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. See Note 6. Financial Instruments and Fair Value Measurements for additional information.

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%. See Note 6. Financial Instruments and Fair Value Measurements for additional information.

During the three months ended September 30, 2023 and 2022, the Company capitalized $0.1 million and $0.9 million, respectively, in interest related to projects under development or construction. During the nine months ended September 30, 2023 and 2022, the Company capitalized $2.6 million and $1.8 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 both the three months ended September 30, 2023 and 2022, include a gain of less than $0.1 million on additional infrastructure improvements contributed to the Company’s unconsolidated Latitude Margaritaville Watersound JV. Gain on contributions to unconsolidated joint ventures for the nine months ended September 30, 2023 and 2022, include a gain of $0.6 million and $0.2 million, respectively, on additional infrastructure improvements contributed to the Company’s unconsolidated Latitude Margaritaville Watersound JV. The three and nine months ended September 30, 2022, include a gain of $1.4 million on land and impact fees contributed to the Company’s unconsolidated Pier Park RI JV. The nine months ended September 30, 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 from Unconsolidated Joint Ventures

Equity in income 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 from unconsolidated joint ventures during the three months ended September 30, 2023 and 2022, includes $8.8 million and $2.2 million of income, respectively, related to the Latitude Margaritaville Watersound JV. Equity in income from unconsolidated joint ventures during the nine months ended September 30, 2023 and 2022, includes $18.6 million and $2.5 million of income, respectively, related to the Latitude Margaritaville Watersound 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. Prior to optional prepayment, in full, of the installment notes in August 2023, the Company recorded the accretion of investment income from its retained interest investment over the life of the retained interest using the effective yield method. See Note 8. Other Assets for additional information. During the three and nine months ended September 30, 2022, the Company had a gain on insurance recovery of $0.9 million and $4.2 million, respectively, and incurred loss from hurricane damage of less than $0.1 million, during each period, related to Hurricane Michael. In November 2022, the Company closed out the claim related to Hurricane Michael.

Miscellaneous income, net during the three and nine months ended September 30, 2023, includes $0.5 million and $1.1 million, respectively, the Company received from the Florida Division of Emergency Management’s Florida Timber Recovery Block Grant (“TRBG”) program 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, 2023. Miscellaneous income, net during the nine months ended September 30, 2023, also includes a $0.4 million gain on retained interest investment. Miscellaneous income, net during the three and nine months ended September 30, 2023, includes $0.4 million and $0.6 million, respectively, of expense for cleanup of damaged timber as a result of Hurricane Michael. Miscellaneous income, net during the three and nine months ended September 30, 2022, includes a $0.3 million and $1.0 million, respectively, gain on retained interest investment and $0.8 million and $1.8 million, respectively, received from the Pier Park CDD for repayment of subordinated notes. Miscellaneous income, net during the nine months ended September 30, 2022, also includes expenses of $1.1 million for design costs no longer pursued and $0.6 million for a homeowner’s association special assessment.