# ST JOE Co: Form 10-Q for the period ended Jun 30, 2023

- Company: [ST JOE Co](/companies/joe.md) (CIK 745308)
- Form: 10-Q
- Filed: 2023-07-26
- Accepted by EDGAR: Jul 26, 2023, 16:23 ET
- Period: 2023-06-30
- Accession: 0001558370-23-012297
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/745308/000155837023012297/joe-20230630x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/745308/000155837023012297/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-04-01 to 2023-06-30 | $128.2m | us-gaap:Revenues |
| Revenue | 6 months, 2023-01-01 to 2023-06-30 | $201.2m | us-gaap:Revenues |
| Operating income | 3 months, 2023-04-01 to 2023-06-30 | $41.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2023-01-01 to 2023-06-30 | $53.1m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-04-01 to 2023-06-30 | $7.2m | us-gaap:InterestExpense |
| Interest expense | 6 months, 2023-01-01 to 2023-06-30 | $13.4m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-04-01 to 2023-06-30 | $11.5m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2023-01-01 to 2023-06-30 | $14.9m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-04-01 to 2023-06-30 | $34.7m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2023-01-01 to 2023-06-30 | $45.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-04-01 to 2023-06-30 | $0.60 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2023-01-01 to 2023-06-30 | $0.77 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-04-01 to 2023-06-30 | $0.60 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2023-01-01 to 2023-06-30 | $0.77 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-04-01 to 2023-06-30 | 58,317,520 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2023-01-01 to 2023-06-30 | 58,313,320 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2023-01-01 to 2023-06-30 | $52.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2023-01-01 to 2023-06-30 | $2.6m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2023-04-01 to 2023-06-30 | $5.8m | us-gaap:PaymentsOfDividendsCommonStock |
| Dividends paid | 6 months, 2023-01-01 to 2023-06-30 | $11.7m | us-gaap:PaymentsOfDividendsCommonStock |
| Cash and equivalents | at 2023-06-30 | $60.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Total assets | at 2023-06-30 | $1.52bn | us-gaap:Assets |
| Total liabilities | at 2023-06-30 | $840.4m | us-gaap:Liabilities |
| Long-term debt | at 2023-06-30 | $446.6m | us-gaap:LongTermDebt |
| Shareholders' equity | at 2023-06-30 | $664.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 129,949 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes in Item 1 and with the audited consolidated financial statements and the related notes included in our annual report on Form 10-K. The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to risks and uncertainties, including the risks and uncertainties described in “Forward-Looking Statements” below and “Risk Factors” on page 6 of our annual report on Form 10-K. Our actual results may differ materially from those contained in or implied by any forward-looking statements. We assume no obligation to revise or publicly release any revision to any forward-looking statements contained in this quarterly report on Form 10-Q, unless required by law.*

### Business Overview

St. Joe is a real estate development, asset management and operating company with all of its real estate assets and operations in Northwest Florida. We intend to use existing assets for residential, hospitality and commercial ventures. We have significant residential and commercial land-use entitlements. We actively seek higher and better uses for our real estate assets through a range of development activities. As part of our core business strategy, we have created a meaningful portion of our business through joint ventures and limited partnerships over the past several years. We enter into these arrangements for the purposes of developing real estate and other business activities, which we believe allows us to complement our growth strategy, leverage industry expertise and diversify our business. We may also partner with or explore the sale of discrete assets when we and/or others can better deploy resources. We seek to enhance the value of our owned real estate assets by developing residential, commercial and hospitality projects to meet market demand. Approximately 86% of our real estate is located in Florida’s Bay, Gulf, and Walton counties. Approximately 90% of our real estate land holdings are located within fifteen miles of the Gulf of Mexico.

We believe our present capital structure, liquidity and land provide us with years of opportunities to increase recurring revenue and long-term value for our shareholders. We intend to focus on our core business activity of real estate development, asset management and operations. We continue to develop a broad range of asset types that we believe will provide acceptable rates of return, grow recurring revenues and support future business. Capital commitments will be funded with cash proceeds from completed projects, existing cash, owned-land, partner capital and financing arrangements. We do not anticipate immediate benefits from investments. Timing of projects may be subject to delays caused by factors beyond our control. We may also choose to operate rather than lease assets, lease rather than sell assets, or sell improved rather than unimproved land that may delay revenue and profits.

Our real estate investment strategy focuses on projects that meet long-term risk-adjusted return criteria. Our practice is to only incur such expenditures when our analysis indicates that a project will generate a return equal to or greater than the threshold return over its life.

### Highlights for the second quarter of 2023 compared to the second quarter of 2022 include:

- Quarterly net income attributable to the Company increased by 104.1% to $34.7 million compared to $17.0 million.
- Quarterly revenue increased by 87.8% to $128.2 million from $68.2 million.
- Real estate revenue increased by 147.5% to $69.3 million from $28.0 million with average base revenue, excluding homesite residuals, per homesite sold of $153,000 as compared to $83,000.
- Hospitality revenue increased by 52.4% to a quarterly record of $45.1 million from $29.6 million.
- Leasing revenue increased by 33.3% to $12.4 million from $9.3 million. As of June 30, 2023, the 1,041,000 of net rentable square feet were 98% leased.
- Homesite closings volume increased 29.9% to 300 homesites from 231 homesites.
- Latitude Margaritaville Watersound JV, an unconsolidated joint venture, home sale transaction completions increased by 152.3% to 164 homes as compared to 65 homes.

### Market Conditions

Throughout the first half of 2023, we continued to generate positive financial results. While macroeconomic factors such as inflation, rising interest rates, supply chain disruptions, financial institution disruptions and geopolitical conflicts, among other things, have created economic headwinds and impacted buyer sentiment, demand across our segments remains strong. We believe this is primarily the result of the continued growth of Northwest Florida, which we attribute to the region’s high quality of life, natural beauty and outstanding amenities, as well as the evolving flexibility in the workplace.

Despite the strong demand across our segments, we also continue to feel the impact from the aforementioned macroeconomic factors, including supply chain disruptions which have extended the time to complete hospitality and commercial projects. In addition, inflation and rising interest rates, have increased operating costs and loan rates, as compared to prior periods. In addition, while rising interest rates have negatively impacted buyers’ ability to obtain financing and the housing market generally, homebuilders have performed on their contractual obligations with us.

Given our diverse portfolio of residential holdings, the mix of sales and pricing from different communities may also impact revenue and margins period over period, as discussed in more detail below.

### Reportable Segments

We conduct primarily all of our business in the following three reportable segments: (1) residential, (2) hospitality and (3) commercial.

The following table sets forth the relative contribution of these reportable segments to our consolidated operating revenue:

| ​ ​ ​ ​ ​ Segment Operating Revenue | ​ ​ Three Months Ended June 30, 2023 | ​ ​ ​ 2022 | ​ ​ Six Months Ended June 30, 2023 | ​ ​ ​ 2022 | ​ ​ ​ ​ |
| --- | ---: | ---: | ---: | ---: | --- |
| Residential | 49.5% | 33.7% | 45.5% | 41.9% | ​ |
| Hospitality | 35.6% | 43.0% | 35.0% | 34.2% | ​ |
| Commercial | 14.3% | 22.5% | 18.5% | 23.1% | ​ |
| Other | 0.6% | 0.8% | 1.0% | 0.8% | ​ |
| **Consolidated operating revenue** | **100.0%** | **100.0%** | **100.0%** | **100.0%** | **​** |

For more information regarding our reportable segments see Note 17. *Segment Information.*

### Residential Segment

Our residential segment typically plans and develops residential communities of various sizes across a wide range of price points and sells homesites to homebuilders or retail consumers. Our residential segment also evaluates opportunities to enter into JV agreements for specific communities such as Latitude Margaritaville Watersound.

Our residential segment includes the Watersound Origins, Watersound Origins West, Watersound Camp Creek, Breakfast Point East, Titus Park, Ward Creek, College Station, Park Place, Salt Creek at Mexico Beach, WindMark

Beach and SouthWood communities, which are large scale, multi-phase communities with current development activity, sales activity or future phases. Homesites in these communities are developed based on market demand and sold primarily to homebuilders and on a limited basis to retail customers.

The East Lake Creek, East Lake Powell, Lake Powell, Teachee, West Bay Creek and West Laird communities have phases of homesites in preliminary planning or permitting. Homesites in these communities will be developed based on market demand and sold primarily to homebuilders and on a limited basis to retail customers.

The SummerCamp Beach community has homesites available for sale and along with the RiverCamps community, both have additional lands for future development.

The Latitude Margaritaville Watersound community is a planned 55+ active adult residential community in Bay County, Florida. The community is located near the Intracoastal Waterway with convenient access to the Northwest Florida Beaches International Airport. The community is being developed through our unconsolidated Latitude Margaritaville Watersound JV with our partner Minto Communities USA, a homebuilder and community developer, and is estimated to include approximately 3,500 residential homes, which will be developed in smaller increments of discrete neighborhoods. As of June 30, 2023, the unconsolidated Latitude Margaritaville Watersound JV had 665 homes under contract, which are expected to result in a sales value of approximately $333.2 million at closing of the homes. See Note 4. *Joint Ventures* for additional information.

The residential homesite pipeline by community/project is as follows:

| ​ ​ ​ ​ Community/Project | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Location | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ Residential Homesite Pipeline (a) Platted or Under Development | ​ ​ ​ ​ | ​ ​ Engineering or Permitting | ​ ​ ​ ​ | ​ Additional Entitlements with Concept Plan | ​ ​ ​ ​ | ​ ​ ​ Total |
| --- | --- | --- | --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Breakfast Point East (b) | ​ | Bay County, FL | ​ | ​ | 103 | ​ | 266 | ​ | 104 | ​ | 473 |
| College Station | ​ | Bay County, FL | ​ | ​ | — | ​ | 58 | ​ | 265 | ​ | 323 |
| East Lake Creek (b) | ​ | Bay County, FL | ​ | ​ | — | ​ | — | ​ | 200 | ​ | 200 |
| East Lake Powell (c) | ​ | Bay County, FL | ​ | ​ | — | ​ | — | ​ | 360 | ​ | 360 |
| Lake Powell (d) | ​ | Bay County, FL | ​ | ​ | — | ​ | — | ​ | 1,352 | ​ | 1,352 |
| Latitude Margaritaville Watersound (d) (e) | ​ | Bay County, FL | ​ | ​ | 556 | ​ | 687 | ​ | 1,581 | ​ | 2,824 |
| Salt Creek at Mexico Beach (b) | ​ | Bay County, FL | ​ | ​ | — | ​ | 92 | ​ | 275 | ​ | 367 |
| Salt Creek at Mexico Beach Townhomes (b) | ​ | Bay County, FL | ​ | ​ | — | ​ | 36 | ​ | 82 | ​ | 118 |
| Park Place | ​ | Bay County, FL | ​ | ​ | 58 | ​ | — | ​ | 191 | ​ | 249 |
| RiverCamps (c) | ​ | Bay County, FL | ​ | ​ | — | ​ | — | ​ | 149 | ​ | 149 |
| SouthWood (f) | ​ | Leon County, FL | ​ | ​ | 13 | ​ | 80 | ​ | 920 | ​ | 1,013 |
| SummerCamp Beach (b) | ​ | Franklin County, FL | ​ | ​ | 28 | ​ | — | ​ | 273 | ​ | 301 |
| Teachee (d) | ​ | Bay County, FL | ​ | ​ | — | ​ | — | ​ | 1,750 | ​ | 1,750 |
| Titus Park | ​ | Bay County, FL | ​ | ​ | 178 | ​ | 144 | ​ | 560 | ​ | 882 |
| Ward Creek (d) | ​ | Bay County, FL | ​ | ​ | 528 | ​ | 316 | ​ | 601 | ​ | 1,445 |
| Watersound Camp Creek (f) | ​ | Walton County, FL | ​ | ​ | 83 | ​ | — | ​ | — | ​ | 83 |
| Watersound Origins (f) | ​ | Walton County, FL | ​ | ​ | 357 | ​ | — | ​ | — | ​ | 357 |
| Watersound Origins West (d) | ​ | Walton County, FL | ​ | ​ | 67 | ​ | 234 | ​ | 1,694 | ​ | 1,995 |
| West Bay Creek (d) | ​ | Bay County, FL | ​ | ​ | — | ​ | — | ​ | 5,250 | ​ | 5,250 |
| West Laird (d) | ​ | Bay County, FL | ​ | ​ | — | ​ | 1,068 | ​ | 1,117 | ​ | 2,185 |
| WindMark Beach (f) | ​ | Gulf County, FL | ​ | ​ | 122 | ​ | 549 | ​ | 317 | ​ | 988 |
| **Total Homesites** | **​** | **​** | **​** | **​** | **2,093** | ​ | **3,530** | ​ | **17,041** | ​ | **22,664** |

(a) The number of homesites are preliminary and are subject to change. Includes homesites platted or currently in concept planning, engineering, permitting or development. We have significant additional entitlements for future residential homesites on our land holdings.

(b) Planned Unit Development (“PUD”).

(c) Development Agreement (“DA”).

(d) Detailed Specific Area Plan (“DSAP”).

(e) The unconsolidated Latitude Margaritaville Watersound JV builds and sells homes in this community.

(f) Development of Regional Impact (“DRI”).

In addition to the communities listed above, we have a number of other residential project concepts in various stages of planning and evaluation.

As of June 30, 2023, we had nineteen different homebuilders within our residential communities. As of June 30, 2023, we had 1,825 residential homesites under contract, which are expected to result in revenue of approximately $158.5 million, plus residuals, at closing of the homesites over the next several years. By comparison, as of June 30, 2022, we had 2,172 residential homesites under contract, with an expected revenue of approximately $167.8 million, plus residuals. The change in homesites under contract is due to increased homesite transactions in the first half of 2023 and amount of remaining homesites in current phases of the residential communities. There were no cancellations of any contracts held by builders in the current period. The number of homesites under contract is subject to change based on homesite closings and new sales activity. Homesite prices vary significantly by community and often sell in concentrated transactions that may impact quarterly results. As of June 30, 2023, in addition to the 1,825 homesites under contract in other residential communities, our unconsolidated Latitude Margaritaville Watersound JV had 665 homes under contract, which together with the 1,825 homesites are expected to result in a sales value of approximately $491.7 million at closing of the homesites and homes.

### Hospitality Segment

Our hospitality segment features a private membership club (the “Watersound Club”), hotel operations, food and beverage operations, golf courses, beach clubs, retail outlets, gulf-front vacation rentals, management services, marinas and other entertainment assets. The hospitality segment generates revenue from membership sales, membership reservations, golf courses, lodging at our hotels, short-term vacation rentals, management of The Pearl Hotel (prior to acquisition in December 2022), food and beverage operations, merchandise sales, marina operations that include boat slip rentals, boat storage fees and fuel sales, charter flights, other resort and entertainment activities and beach clubs, which includes operation of the WaterColor Beach Club. Hospitality revenue is generally recognized at the point in time services are provided and represent a single performance obligation with a fixed transaction price. Hospitality revenue recognized over time includes non-refundable club membership initiation fees, club membership dues, management fees and other membership fees. The hospitality segment incurs costs from the services and goods provided, personnel costs, maintenance of the facilities and holding costs of the assets we own. From time to time, we may explore the sale of certain hospitality properties, the development of new hospitality properties, as well as new entertainment and management opportunities. Some of our JV assets and other assets incur interest and financing expenses related to the loans as described in Note 9. *Debt, Net.*

Watersound Club provides club members and guests of some of our hotels access to our member facilities, which include Camp Creek golf course and amenities, Shark’s Tooth golf course and tennis center, Watersound Beach Club and a Pilatus PC-12 NG aircraft (“N850J”). Watersound Club offers different types of club memberships, each with different access rights and associated fee structures. Watersound Club is focused on creating an outstanding membership experience combined with the luxurious aspects of a destination resort. Club operations include a private beach club located on Scenic Highway 30A, with over one mile of Gulf of Mexico frontage, two resort-style pools, two restaurants, three bars, kid’s room and a recreation area. Shark’s Tooth includes an 18-hole golf course, tennis center, a full club house, a pro shop, as well as two food and beverage outlets. Camp Creek includes an 18-hole golf course, health and wellness center, restaurants, a tennis and pickle ball center, a resort-style pool complex with separate adult pool, a golf teaching academy, pro shop and multi-sport fields.

Watersound Origins includes an executive golf course, resort-style pool, fitness center, two tennis courts and a private dock located in the community. Access to amenities is reserved to Watersound Origins members consisting of the community residents. The golf course is available for public play.

We own and operate the award-winning WaterColor Inn (which includes the Fish Out of Water restaurant) and The Pearl Hotel (which includes the Havana Beach Bar & Grill restaurant); the Camp Creek Inn, the Hilton Garden Inn Panama City Airport, the Homewood Suites by Hilton Panama City Beach, the Hotel Indigo Panama City Marina, the Home2 Suites by Hilton Santa Rosa Beach, the WaterSound Inn and two gulf-front vacation rental houses. With our JV partners, we own and operate The Lodge 30A and the Embassy Suites by Hilton Panama City Beach Resort. We also operate the WaterColor Beach Club, which includes food and beverage operations and other hospitality related activities, such as beach chair rentals.

We are in the process of constructing a Residence Inn by Marriott, with our JV partner, in Panama City Beach, Florida. Once complete, the hotel will be operated by our JV partner.

Our hotel portfolio by property is as follows:

| ​ ​ ​ Operational | ​ ​ ​ ​ | ​ ​ Location ​ | ​ ​ ​ ​ | ​ Rooms (a) Completed ​ | ​ ​ ​ | ​ Planned ​ | ​ ​ ​ | ​ Total ​ |
| --- | --- | --- | --- | ---: | --- | ---: | --- | ---: |
| Camp Creek Inn (b) | ​ | Walton County, FL | ​ | 75 | ​ | — | ​ | 75 |
| WaterColor Inn (c) | ​ | Walton County, FL | ​ | 67 | ​ | — | ​ | 67 |
| The Pearl Hotel (d) | ​ | Walton County, FL | ​ | 55 | ​ | — | ​ | 55 |
| WaterSound Inn | ​ | Walton County, FL | ​ | 11 | ​ | — | ​ | 11 |
| The Lodge 30A (e) | ​ | Walton County, FL | ​ | 85 | ​ | — | ​ | 85 |
| Home2 Suites by Hilton Santa Rosa Beach (f) | ​ | Walton County, FL | ​ | 107 | ​ | — | ​ | 107 |
| Embassy Suites by Hilton Panama City Beach Resort (g) | ​ | Bay County, FL | ​ | 255 | ​ | — | ​ | 255 |
| Hilton Garden Inn Panama City Airport | ​ | Bay County, FL | ​ | 143 | ​ | — | ​ | 143 |
| Homewood Suites by Hilton Panama City Beach (h) | ​ | Bay County, FL | ​ | 131 | ​ | — | ​ | 131 |
| Hotel Indigo Panama City Marina (f) | ​ | Bay County, FL | ​ | 124 | ​ | — | ​ | 124 |
| TownePlace Suites by Marriott Panama City Beach Pier Park (i) | ​ | Bay County, FL | ​ | 124 | ​ | — | ​ | 124 |
| **Total operational rooms** | **​** | **​** | **​** | **1,177** | **​** | **—** | **​** | **1,177** |
| ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| **Under Development/Construction** | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ |
| Residence Inn by Marriott, Panama City Beach, Florida (j) | ​ | Bay County, FL | ​ | — | ​ | 121 | ​ | 121 |
| **Total rooms under development/construction** | **​** | **​** | **​** | **—** | **​** | **121** | **​** | **121** |
| **Total rooms** | **​** | **​** | **​** | **1,177** | **​** | **121** | **​** | **1,298** |

(a) Includes hotels currently in operation or under development and construction. We have significant additional entitlements for future hotel projects on our land holdings.

(b) The hotel was completed and partially open in June 2023, with rooms available for occupancy in July 2023.

(c) Seven additional suites were completed in June 2022.

(d) We acquired the hotel in December 2022. The hotel was previously owned by a third party, but operated by our hospitality segment.

(e) The hotel opened in February 2023.

(f) The hotel opened in June 2023.

(g) The hotel opened in April 2023.

(h) The hotel opened in March 2022.

(i) The hotel is operated by our JV partner. The Pier Park TPS JV is unconsolidated and is accounted for under the equity method of accounting, which is included within our commercial segment.

(j) The hotel is under development with our JV partner. Once complete, the hotel will be operated by our JV partner. The Pier Park RI JV is unconsolidated and is accounted for under the equity method of accounting, which is included within our commercial segment.

We own and operate two marinas, the Point South Marina Bay Point in Bay County, Florida and Point South Marina Port St. Joe in Gulf County, Florida. We are planning new marinas along the Intracoastal Waterway. The Point South Marina Bay Point reopened in the third quarter of 2022 and the Point South Marina Port St. Joe reopened in the fourth quarter of 2022 after completion of reconstruction due to damage from Hurricane Michael.

We also own and operate retail stores, two standalone restaurants and other entertainment assets.

In addition to the properties listed above, we have a number of hospitality projects in various stages of planning.

### Commercial Segment

Our commercial segment includes leasing of commercial property, multi-family, senior living, self-storage and other assets. The commercial segment also oversees the planning, development, entitlement, management and sale of our commercial and rural land holdings for a variety of uses, including a broad range of retail, office, hotel, senior living, multi-family, self-storage and industrial properties. We provide development opportunities for national, regional and local retailers and other strategic partners in Northwest Florida. We own and manage retail shopping centers and develop commercial parcels. We are currently developing the Watersound Town Center in Walton County, Florida and Watersound West Bay Center in Bay County, Florida. These lifestyle centers are complementary to our Watersound Origins and Latitude Margaritaville Watersound residential communities. In conjunction with Florida State University (“FSU”) and Tallahassee Memorial Hospital (“TMH”), we are also in the process of developing an 87-acre medical campus in Bay County, Florida. We also have large land holdings near the Pier Park retail center, adjacent to the Northwest Florida Beaches International Airport, near or within business districts in the region and along major roadways. We also lease land for various other uses. The commercial segment also manages our timber holdings in Northwest Florida which includes growing and selling pulpwood, sawtimber and other products.

The commercial segment generates leasing revenue and incurs leasing expenses primarily from maintenance and management of our properties, personnel costs and asset holding costs. Our commercial segment also generates revenue from the sale of developed and undeveloped land, timber holdings or land with limited development and/or entitlements and the sale of commercial operating properties. Real estate sales in our commercial segment incur costs of revenue directly associated with the land, development, construction, timber and selling costs. Our commercial segment generates timber revenue primarily from open market sales of timber on site without the associated delivery costs. Some of our JV assets and other assets incur interest and financing expenses related to the loans as described in Note 9. *Debt, Net.*

The commercial segment’s portfolio of leasable properties continues to expand and diversify. Through wholly-owned subsidiaries and consolidated and unconsolidated JVs we are in the process of constructing 211 multi-family units and 148 senior living units, in addition to the 917 multi-family units and 107 senior living units that have been completed.

Total units and percentage leased for multi-family and senior living communities by location are as follows:

| ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Location Multi-family | ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ Units Planned ​ | ​ ​ ​ ​ ​ ​ | ​ June 30, 2023 ​ ​ Units Completed ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Units Leased ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Percentage ​ Leased ​ of Units ​ Completed ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ | ​ December 31, 2022 ​ ​ Units Completed ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Units Leased ​ | ​ ​ ​ ​ ​ ​ | ​ ​ ​ Percentage ​ Leased ​ of Units ​ Completed ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Pier Park Crossings ​ Bay County, FL | ​ | 240 | ​ | 240 | ​ | 222 | ​ | 93% | ​ | 240 | ​ | 228 | ​ | 95% |
| Pier Park Crossings Phase II ​ Bay County, FL | ​ | 120 | ​ | 120 | ​ | 111 | ​ | 93% | ​ | 120 | ​ | 115 | ​ | 96% |
| Watersound Origins Crossings ​ Walton County, FL | ​ | 217 | ​ | 217 | ​ | 199 | ​ | 92% | ​ | 217 | ​ | 199 | ​ | 92% |
| North Bay Landing (a) ​ Bay County, FL | ​ | 240 | ​ | 240 | ​ | 208 | ​ | 87% | ​ | 120 | ​ | 94 | ​ | 78% |
| Mexico Beach Crossings (b) **​** Bay County, FL | **​** | 216 | ​ | 24 | ​ | 11 | ​ | 46% | ​ | — | ​ | — | ​ | N/A% |
| Origins Crossings Townhomes **​** Walton County, FL | **​** | 64 | ​ | 64 | ​ | 42 | ​ | 66% | ​ | 48 | ​ | 33 | ​ | 69% |
| WindMark Beach (c) **​** Gulf County, FL | **​** | 31 | ​ | 12 | ​ | 10 | ​ | 83% | ​ | 12 | ​ | 10 | ​ | 83% |
| **Total multi-family units** | **​** | **1,128** | **​** | **917** | **​** | **803** | **​** | 88% | **​** | **757** | **​** | **679** | **​** | 90% |
| **​** **​** **​** | **​** | **​** | **​** | **​** | **​** | **​** | **​** | **​** **​** | **​** | **​** | **​** | **​** | **​** | **​** **​** |
| **Senior living communities** | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ ​ | ​ | ​ | ​ | ​ | ​ | ​ ​ |
| Watercrest ​ Walton County, FL | ​ | 107 | ​ | 107 | ​ | 106 | ​ | 99% | ​ | 107 | ​ | 88 | ​ | 82% |
| Watersound Fountains (d) ​ Walton County, FL | ​ | 148 | ​ | — | ​ | — | ​ | N/A% | ​ | — | ​ | — | ​ | N/A% |
| **Total senior living units** | **​** | **255** | **​** | **107** | **​** | **106** | **​** | 99% | **​** | **107** | **​** | **88** | **​** | 82% |
| **Total units** | **​** | **1,383** | **​** | **1,024** | **​** | **909** | **​** | 89% | **​** | **864** | **​** | **767** | **​** | 89% |

(a) Construction began in the fourth quarter of 2020 and was completed in the second quarter of 2023.

(b) Construction began in the first quarter of 2022 and is ongoing.

(c) As of June 30, 2023 and December 31, 2022, we were in the process of converting 19 units for long-term rental use, which were not available for lease due to construction.

(d) Construction began in the second quarter of 2021 and is ongoing. The Watersound Fountains Independent Living JV is unconsolidated and is accounted for under the equity method of accounting.

Pier Park Crossings, which was developed in two phases, includes 360 completed apartment units in Panama City Beach, Florida. Watersound Origins Crossings includes 217 completed apartment units adjacent to the Watersound Town Center. North Bay Landing includes 240 completed apartment units in Panama City, Florida. Origins Crossings Townhomes includes 64 completed units near the Watersound Town Center. The WindMark Beach community includes

12 completed long-term rental units and 19 units in the process of being converted from short-term to long-term rental units in Port St. Joe, Florida. Watercrest includes 107 completed senior living units in Santa Rosa Beach, Florida. In addition, we have a multi-family community and senior living community under construction. Mexico Beach Crossings, planned for 216 apartment units, with 24 units completed as of June 30, 2023, is located in Mexico Beach, Florida. Watersound Fountains, an unconsolidated JV, planned for 148 independent living units, is located near the Watersound Town Center the Watersound Origins residential community. We have additional multi-family communities in various stages of planning.

Our leasing portfolio consists of approximately 1,041,000 square feet of leasable space for mixed-use, retail, industrial, office, self-storage and medical uses. This includes our consolidated Pier Park North JV. Through separate unconsolidated JVs, other commercial properties include a 124-room TownePlace Suites by Marriott operated by our JV partner, a Busy Bee branded fuel station and convenience store, which includes a Starbucks, operated by our JV partner and a golf cart sales and service facility, which is under construction, all located in Panama City Beach, Florida.

The total net rentable square feet and percentage leased of leasing properties are as follows:

| ​ ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ Location | ​ ​ ​ ​ ​ | ​ June 30, 2023 Net Rentable Square Feet\* | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ Percentage ​ Leased ​ | ​ ​ ​ ​ ​ ​ | ​ December 31, 2022 Net Rentable Square Feet\* | ​ ​ ​ ​ | ​ ​ ​ ​ ​ ​ ​ Percentage ​ Leased ​ |
| --- | --- | --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Pier Park North |  | Bay County, FL |  | 320,310 |  | 100% | ​ | 320,310 |  | 97% |
| VentureCrossings |  | Bay County, FL |  | 303,605 |  | 100% | ​ | 303,605 |  | 96% |
| Watersound Town Center (a) | ​ | Walton County, FL | ​ | 96,414 | ​ | 99% | ​ | 89,662 | ​ | 99% |
| Beckrich Office Park (b) (c) |  | Bay County, FL |  | 78,322 |  | 96% | ​ | 78,294 |  | 99% |
| Watersound Self-Storage | ​ | Walton County, FL | ​ | 67,694 | ​ | 92% | ​ | 67,694 | ​ | 87% |
| WindMark Beach Town Center (b) (d) |  | Gulf County, FL |  | 44,748 |  | 71% | ​ | 44,748 |  | 71% |
| WaterColor Town Center (b) |  | Walton County, FL |  | 22,199 |  | 99% | ​ | 22,199 |  | 100% |
| Cedar Grove Commerce Park | ​ | Bay County, FL | ​ | 19,389 | ​ | 100% | ​ | 19,389 | ​ | 100% |
| Port St. Joe Commercial |  | Gulf County, FL |  | 16,964 |  | 100% | ​ | 16,964 |  | 100% |
| Beach Commerce Park (b) |  | Bay County, FL |  | 14,800 |  | 100% | ​ | 14,800 |  | 100% |
| South Walton Commerce Park (e) | ​ | Walton County, FL | ​ | 11,570 | ​ | 88% | ​ | 11,570 | ​ | 100% |
| WaterSound Gatehouse (b) |  | Walton County, FL |  | 10,271 |  | 100% | ​ | 10,271 |  | 100% |
| Other (f) | ​ | Bay, Gulf and Walton Counties, FL | ​ | 34,224 | ​ | 100% | ​ | 34,224 | ​ | 100% |
| **​** |  |  |  | **1,040,510** |  | **98%** | **​** | **1,033,730** |  | **95%** |

\* Net Rentable Square Feet is designated as the current square feet available for lease as specified in the applicable lease agreements plus management’s estimate of space available for lease based on construction drawings.

(a) Includes net rentable square feet of 6,752 within our residential segment. Included in net rentable square feet as of June 30, 2023, is 2,137 square feet leased to a consolidated JV.

(b) In addition to net rentable square feet there is also space that we occupy or that serves as common area.

(c) Included in net rentable square feet as of June 30, 2023 and December 31, 2022, is 1,500 square feet leased to a consolidated JV.

(d) Included in net rentable square feet as of June 30, 2023 and December 31, 2022, is 13,808 square feet of unfinished space.

(e) Included in net rentable square feet as of December 31, 2022, is 1,364 square feet leased to a consolidated JV.

(f) Includes various other properties, each with less than 10,000 net rentable square feet.

We have other commercial projects under development and construction as detailed in the table below. In addition to these properties, we have other commercial buildings in various stages of planning.

| ​ ​ ​ | ​ ​ ​ | ​ ​ Location | ​ ​ ​ | ​ June 30, 2023 Completed Net Rentable Square Feet | ​ ​ | ​ ​ Percentage Leased ​ | ​ ​ | ​ Square Feet Under Construction | ​ ​ | ​ Additional Planned Square Feet | ​ ​ | ​ Total Square Feet\* |
| --- | --- | --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Watersound Town Center | ​ | Walton County, FL | ​ | 96,414 | ​ | 99% | ​ | 44,016 | ​ | 259,570 | ​ | 400,000 |
| Watersound West Bay Center | ​ | Bay County, FL | ​ | — | ​ | N/A% | ​ | — | ​ | 500,000 | ​ | 500,000 |
| FSU/TMH Medical Campus | ​ | Bay County, FL | ​ | — | ​ | N/A% | ​ | 80,300 | ​ | 239,700 | ​ | 320,000 |
| ​ | ​ | ​ | ​ | 96,414 | ​ | 99% | ​ | 124,316 | ​ | 999,270 | ​ | 1,220,000 |

54

\* Total square feet are based on current estimates and are subject to change.

### Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. We base these estimates on historical experience, available current market information and on various other assumptions that management believes are reasonable under the circumstances. Additionally, we evaluate the results of these estimates on an on-going basis. Management’s estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and our accounting estimates are subject to change.

Critical accounting policies that we believe reflect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements are set forth in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no significant changes in these policies during the first six months of 2023, however we cannot assure you that these policies will not change in the future.

### Recently Adopted and Issued Accounting Pronouncements

See Note 2. *Summary of Significant Accounting Policies* to our condensed consolidated financial statements included in this report for recently issued or adopted accounting standards, including the date of adoption and effect on our condensed consolidated financial statements.

### Seasonality and Market Variability

Our operations may be affected by seasonal fluctuations. The revenues and earnings from our business segments may vary significantly from period to period. Homebuilders tend to buy multiple homesites in sporadic transactions. In addition, homesite prices vary significantly by community, which further impacts period over period results. Therefore, there may be reporting periods in which we have no, or significantly less, revenue from residential or commercial real estate sales. We may also choose to operate rather than lease assets, lease rather than sell assets, or sell improved rather than unimproved land that may delay revenue and profits.

Hospitality revenues are typically higher in the second and third quarters, and vary depending on the timing of holidays and school breaks. Commercial real estate sales tend to be non-recurring. Projects depend on uncertain demand. Extraordinary events such as hurricanes or public health emergencies may dramatically change demand and pricing for products and services.

### Results of Operations

### Consolidated Results

The following table sets forth a comparison of the results of our operations:

*In millions*

| ​ ​ ​ ​ ​ Revenue: | ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Real estate revenue | ​ | $69.3 | ​ | $28.0 | ​ | $104.3 | ​ | $64.8 |
| Hospitality revenue | ​ | 45.1 | ​ | 29.6 | ​ | 69.6 | ​ | 45.9 |
| Leasing revenue | ​ | 12.4 | ​ | 9.3 | ​ | 24.2 | ​ | 18.1 |
| Timber revenue | ​ | 1.3 | ​ | 1.3 | ​ | 3.0 | ​ | 4.3 |
| Total revenue | ​ | 128.1 | ​ | 68.2 | ​ | 201.1 | ​ | 133.1 |
| **Expenses:** | ​ |  | ​ | ​ | ​ |  | ​ |  |
| Cost of real estate revenue | ​ | 31.3 | ​ | 12.8 | ​ | 51.4 | ​ | 28.1 |
| Cost of hospitality revenue | ​ | 33.3 | ​ | 21.4 | ​ | 56.2 | ​ | 36.3 |
| Cost of leasing revenue | ​ | 6.5 | ​ | 4.0 | ​ | 11.9 | ​ | 7.7 |
| Cost of timber revenue | ​ | 0.2 | ​ | 0.2 | ​ | 0.4 | ​ | 0.4 |
| Corporate and other operating expenses | ​ | 5.5 | ​ | 5.5 | ​ | 11.3 | ​ | 11.1 |
| Depreciation, depletion and amortization | ​ | 9.5 | ​ | 5.5 | ​ | 16.8 | ​ | 10.5 |
| Total expenses | ​ | 86.3 | ​ | 49.4 | ​ | 148.0 | ​ | 94.1 |
| **Operating income** | **​** | **41.8** | **​** | **18.8** | **​** | **53.1** | **​** | **39.0** |
| Other income (expense): | ​ |  | ​ | ​ | ​ |  | ​ |  |
| Investment income, net | ​ | 3.2 | ​ | 2.5 | ​ | 6.1 | ​ | 4.8 |
| Interest expense | ​ | (7.2) | ​ | (4.1) | ​ | (13.4) | ​ | (8.2) |
| Gain on contributions to unconsolidated joint ventures | ​ | — | ​ | 0.1 | ​ | 0.6 | ​ | 0.6 |
| Equity in income from unconsolidated joint ventures | ​ | ​ 6.0 | ​ | ​ 1.4 | ​ | ​ 9.7 | ​ | ​ 0.9 |
| Other income, net | ​ | 1.5 | ​ | 4.3 | ​ | 2.1 | ​ | 3.9 |
| Total other income, net | ​ | 3.5 | ​ | 4.2 | ​ | 5.1 | ​ | 2.0 |
| **Income before income taxes** | **​** | **45.3** | **​** | **23.0** | **​** | **58.2** | **​** | **41.0** |
| Income tax expense | ​ | (11.5) | ​ | (5.9) | ​ | (14.9) | ​ | (10.5) |
| **Net income** | **​** | **$33.8** | **​** | **$17.1** | **​** | **$43.3** | **​** | **$30.5** |

### Real Estate Revenue and Gross Profit

The following table sets forth a comparison of our total consolidated real estate revenue and gross profit:

*Dollars in millions*

| ​ ​ ​ ​ Revenue: | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ | ​ ​ % (a) | ​ ​ 2022 ​ | ​ | ​ ​ ​ % (a) | ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ % (a) | ​ ​ 2022 ​ | ​ | ​ ​ % (a) ​ ​ |
| --- | --- | ---: | --- | ---: | ---: | --- | ---: | --- | ---: | --- | ---: | ---: | --- | ---: |
| Residential real estate revenue | ​ | $63.4 |  | 91.5% | $23.0 |  | 82.1% | ​ | $91.4 |  | 87.6% | $55.7 |  | 86.0% |
| Commercial and rural real estate revenue | ​ | 5.2 |  | 7.5% | 4.5 |  | 16.1% | ​ | 11.1 |  | 10.7% | 8.1 |  | 12.5% |
| Other revenue | ​ | 0.7 |  | 1.0% | 0.5 |  | 1.8% | ​ | 1.8 |  | 1.7% | 1.0 |  | 1.5% |
| **Real estate revenue** | **​** | **$69.3** |  | **100.0%** | **$28.0** |  | **100.0%** | **​** | **$104.3** |  | **100.0%** | **$64.8** |  | **100.0%** |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ ​ | ​ | ​ ​ |
| **Gross profit:** | ​ |  |  | ​ |  |  | ​ | ​ |  |  | ​ |  |  | ​ |
| Residential real estate | ​ | $34.1 |  | 53.8% | $11.1 |  | 48.3% | ​ | $45.9 |  | 50.2% | $30.0 |  | 53.9% |
| Commercial and rural real estate | ​ | 3.7 |  | 71.2% | 4.0 |  | 88.9% | ​ | 6.4 |  | 57.7% | 6.5 |  | 80.2% |
| Other | ​ | 0.2 |  | 28.6% | 0.1 |  | 20.0% | ​ | 0.6 |  | 33.3% | 0.2 |  | 20.0% |
| **Gross profit** | **​** | **$38.0** |  | **54.8%** | **$15.2** |  | **54.3%** | **​** | **$52.9** |  | **50.7%** | **$36.7** |  | **56.6%** |

(a) Calculated percentage of total real estate revenue and the respective gross margin percentage.

*Residential Real Estate Revenue and Gross Profit*. During the three months ended June 30, 2023, residential real estate revenue increased $40.4 million, or 175.7%, to $63.4 million, as compared to $23.0 million during the same period in 2022. During the three months ended June 30, 2023, residential real estate gross profit increased $23.0 million to $34.1 million (or gross margin of 53.8%), as compared to $11.1 million (or gross margin of 48.3%) during the same period in 2022. During the three months ended June 30, 2023, we sold 300 homesites and had no unimproved residential land sales, compared to 231 homesites and unimproved residential land sales of $0.1 million during the same period in 2022. During the three months ended June 30, 2023 and 2022, the average base revenue, excluding homesite residuals, per homesite sold was approximately $153,000 and $83,000, respectively. The increase in average base revenue per homesite sold was due to the mix of sales from different communities, primarily from sales in the Watersound Camp Creek and Watersound Origins communities, which had a higher volume during the current period. The prior period homesite sales also include the sale of 42 entitled but undeveloped homesites sold within the SouthWood community, which reduced the average price per homesite. The revenue, gross profit and margin for each period was impacted by the difference in pricing among the communities, the difference in the cost of the homesite development and the volume of sales within each of the communities. The number of homesites sold varied each period due to the timing of homebuilder contractual closing obligations in our residential communities.

During the six months ended June 30, 2023, residential real estate revenue increased $35.7 million, or 64.1%, to $91.4 million, as compared to $55.7 million during the same period in 2022. During the six months ended June 30, 2023, residential real estate gross profit increased $15.9 million to $45.9 million (or gross margin of 50.2%), as compared to $30.0 million (or gross margin of 53.9%) during the same period in 2022. During the six months ended June 30, 2023, we sold 627 homesites and had unimproved residential land sales of $0.6 million, compared to 412 homesites and unimproved residential land sales of $0.1 million during the same period in 2022. During the six months ended June 30, 2023 and 2022, the average base revenue, excluding homesite residuals, per homesite sold was approximately $105,000 and $113,000, respectively. The decrease in average base revenue per homesite sold during the current period was due to the mix of sales from different communities. The current period homesite sales also include the sale of 100 entitled but undeveloped homesites sold within the SouthWood community, compared to 42 in the prior period, which reduced the average price per homesite. The revenue, gross profit and margin for each period was impacted by the difference in pricing among the communities, the difference in the cost of the homesite development and the volume of sales within each of the communities. The number of homesites sold varied each period due to the timing of homebuilder contractual closing obligations in our residential communities.

*Commercial and Rural Real Estate Revenue and Gross Profit*. During the three months ended June 30, 2023, we had seven commercial and rural real estate sales totaling approximately 130 acres for $5.1 million and land improvement services of $0.1 million, together resulting in a gross profit of $3.7 million (or gross margin of 71.2%). During the three months ended June 30, 2022, we had six commercial and rural real estate sales totaling approximately 163 acres for $4.0 million and land improvement services of $0.5 million, together resulting in a gross profit of $4.0 million (or gross margin of 88.9%).

During the six months ended June 30, 2023, we had sixteen commercial and rural real estate sales totaling approximately 183 acres for $10.8 million and land improvement services of $0.3 million, together resulting in a gross profit of $6.4 million (or gross margin of 57.7%). During the six months ended June 30, 2022, we had twelve commercial and rural real estate sales totaling approximately 176 acres for $7.3 million and land improvement services of $0.8 million, together resulting in a gross profit of $6.5 million (or gross margin of 80.2%). Revenue from commercial and rural real estate can vary significantly from period-to-period depending on the proximity to developed areas and mix of real estate sold in each period, with varying compositions of retail, office, industrial, rural and other commercial uses.

Our gross margin can vary significantly from period-to-period depending on the characteristics of property sold. Sales of rural and timber land typically have a lower cost basis than residential and commercial real estate sales. In addition, our cost basis in residential and commercial real estate can vary depending on the amount of development or other costs incurred on the property.

*Other Revenue*. Other revenue primarily consists of mitigation bank credit sales and title insurance business revenue.

### Hospitality Revenue and Gross Profit

*In millions*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, 2023 | ​ ​ | ​ ​ ​ 2022 | ​ | ​ ​ ​ Six Months Ended June 30, 2023 | ​ ​ | ​ ​ ​ 2022 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Hospitality revenue | ​ | $45.1 ​ | ​ | $29.6 ​ | ​ | $69.6 ​ | ​ | $45.9 ​ |
| Gross profit | ​ | $11.8 ​ | ​ | $8.2 ​ | ​ | $13.4 ​ | ​ | $9.6 ​ |
| Gross margin | ​ | 26.2% | ​ | 27.7% | ​ | 19.3% | ​ | 20.9% |

Hospitality revenue increased $15.5 million, or 52.4%, to $45.1 million during the three months ended June 30, 2023, as compared to $29.6 million in the same period in 2022. The increase in hospitality revenue was primarily related to the continued increase of club members, as well as an increase in lodging revenue. The increase in lodging revenue was related to The Pearl Hotel, which we acquired in December 2022; Embassy Suites by Hilton Panama City Beach Resort, which opened in April 2023; The Lodge 30A, which opened in February 2023; Home2 Suites by Hilton Santa Rosa Beach and Hotel Indigo Panama City Marina, which both opened in June 2023; Homewood Suites by Hilton Panama City Beach, which opened in March 2022; and new WaterColor Inn suites, which opened in June 2022. The increase in hospitality revenue was also due to the opening of a standalone restaurant and marinas. Hospitality had a gross margin of 26.2% during the three months ended June 30, 2023, compared to 27.7% during the same period in 2022. The decrease in gross margin was primarily due to the opening costs associated with the opening of new hotels in the current period.

Hospitality revenue increased $23.7 million, or 51.6%, to $69.6 million during the six months ended June 30, 2023, as compared to $45.9 million in the same period in 2022. The increase in hospitality revenue was primarily related to the continued increase of club members, as well as an increase in lodging revenue. The increase in lodging revenue was related to The Pearl Hotel, which we acquired in December 2022; Embassy Suites by Hilton Panama City Beach Resort, which opened in April 2023; The Lodge 30A, which opened in February 2023; Home2 Suites by Hilton Santa Rosa Beach and Hotel Indigo Panama City Marina, which both opened in June 2023; Homewood Suites by Hilton Panama City Beach, which opened in March 2022; and new WaterColor Inn suites, which opened in June 2022. The increase in hospitality revenue was also due to the opening of a standalone restaurant and marinas. As of June 30, 2023, Watersound Club had 2,853 members, compared with 2,488 members as of June 30, 2022, an increase of 365 members. Hospitality had a gross margin of 19.3% during the six months ended June 30, 2023, compared to 20.9% during the same period in

2022\. The decrease in gross margin was primarily due to the opening costs associated with the opening of five new hotels in the current period.

### Leasing Revenue and Gross Profit

*In millions*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, 2023 | ​ ​ | ​ ​ ​ 2022 | ​ ​ | ​ ​ ​ Six Months Ended June 30, 2023 | ​ ​ | ​ ​ ​ 2022 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Leasing revenue | ​ | $12.4 ​ | ​ | $9.3 ​ | ​ | $24.2 ​ | ​ | $18.1 ​ |
| Gross profit | ​ | $5.9 ​ | ​ | $5.3 ​ | ​ | $12.3 ​ | ​ | $10.4 ​ |
| Gross margin | ​ | 47.6% | ​ | 57.0% | ​ | 50.8% | ​ | 57.5% |

Leasing revenue increased $3.1 million, or 33.3%, to $12.4 million during the three months ended June 30, 2023, as compared to $9.3 million in the same period in 2022. Leasing revenue increased $6.1 million, or 33.7%, to $24.2 million during the six months ended June 30, 2023, as compared to $18.1 million in the same period in 2022. The increase was primarily due to new multi-family, senior living and marina leases, as well as other new leases. Leasing gross margin was 47.6% during the three months ended June 30, 2023, as compared to 57.0% during the same period in 2022. Leasing gross margin was 50.8% during the six months ended June 30, 2023, as compared to 57.5% during the same period in 2022. The decrease in gross margin was primarily due to increased operating costs, as well as start-up and lease-up expenses in the current periods.

### Timber Revenue and Gross Profit

*In millions*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ ​ Three Months Ended June 30, 2023 | ​ ​ | ​ ​ ​ 2022 | ​ ​ | ​ ​ ​ Six Months Ended June 30, 2023 | ​ ​ | ​ ​ ​ 2022 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Timber revenue | ​ | $1.3 ​ | ​ | $1.3 ​ | ​ | $3.0 ​ | ​ | $4.3 ​ |
| Gross profit | ​ | $1.1 ​ | ​ | $1.1 ​ | ​ | $2.6 ​ | ​ | $3.9 ​ |
| Gross margin | ​ | 84.6% | ​ | 84.6% | ​ | 86.7% | ​ | 90.7% |

Timber revenue and gross margin for the three months ended June 30, 2023 and 2022, were similar. Timber revenue in the current period included a decrease in prices, which was offset by an increase in tons of wood products sold. There were 72,000 tons of wood products sold at an average price per ton of $16.08, during the three months ended June 30, 2023, as compared to 46,000 tons of wood products sold at an average price per ton of $25.14, during the same period in 2022.

Timber revenue decreased $1.3 million, or 30.2%, to $3.0 million during the six months ended June 30, 2023, as compared to $4.3 million in the same period in 2022. The decrease was primarily due to a decrease in prices, partially offset by an increase in tons of wood products sold in the current period. There were 167,000 tons of wood products sold at an average price per ton of $16.28, during the six months ended June 30, 2023, as compared to 153,000 tons of wood products sold at an average price per ton of $26.18, during the same period in 2022. Timber gross margin was 86.7% during the six months ended June 30, 2023, as compared to 90.7% during the same period in 2022. The decrease was primarily due to lower prices in the current period.

### Corporate and Other Operating Expenses

*In millions*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Employee costs | ​ | $2.7 | ​ | $2.4 | ​ | $5.4 | ​ | $4.7 |
| Property taxes and insurance | ​ | 1.3 | ​ | 1.3 | ​ | 2.7 | ​ | 2.6 |
| Professional fees | ​ | 0.7 | ​ | 0.8 | ​ | 1.7 | ​ | 1.9 |
| Marketing and owner association costs | ​ | 0.2 | ​ | 0.4 | ​ | 0.4 | ​ | 0.6 |
| Occupancy, repairs and maintenance | ​ | 0.1 | ​ | 0.2 | ​ | 0.3 | ​ | 0.4 |
| Other miscellaneous | ​ | 0.5 | ​ | 0.4 | ​ | 0.8 | ​ | 0.9 |
| **Total corporate and other operating expenses** | **​** | **$5.5** | **​** | **$5.5** | **​** | **$11.3** | **​** | **$11.1** |

Corporate and other operating expenses for the three and six months ended June 30, 2023 and 2022, were comparable.

### Depreciation, Depletion and Amortization

Depreciation, depletion and amortization expense increased $4.0 million and $6.3 million during the three and six months ended June 30, 2023, respectively, as compared to the same periods in 2022, primarily due to new hospitality and commercial assets placed in service.

### Investment Income, Net

Investment income, net primarily includes (i) interest and dividends earned and accretion of the net discount, (ii) interest income earned on the time deposit held by SPE and (iii) interest earned on mortgage notes receivable and other receivables as detailed in the table below:

*In millions*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Interest, dividend and accretion income | ​ | $0.7 | ​ | $0.3 | ​ | $1.2 | ​ | $0.4 |
| Unrealized loss on investments, net | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ 0.1 |
| Interest income from investments in special purpose entities | ​ | 2.0 | ​ | 2.0 | ​ | 4.0 | ​ | 4.0 |
| Interest earned on notes receivable and other interest | ​ | 0.5 | ​ | 0.2 | ​ | 0.9 | ​ | 0.3 |
| **Total investment income, net** | **​** | **$3.2** | **​** | **$2.5** | **​** | **$6.1** | **​** | **$4.8** |

Investment income, net increased $0.7 million to $3.2 million for the three months ended June 30, 2023, as compared to $2.5 million in the same period in 2022. Investment income, net increased $1.3 million to $6.1 million for the six months ended June 30, 2023, as compared to $4.8 million in the same period in 2022. The increases were primarily due to higher interest rates earned on our investments and cash equivalents in the current periods. The increases were also due to interest earned on the unimproved land contribution to our unconsolidated Latitude Margaritaville Watersound JV related to increased home sales transactions in the community in the current periods.

### Interest Expense

Interest expense primarily includes interest incurred on project financing, the Senior Notes issued by Northwest Florida Timber Finance, LLC, CDD debt and finance leases, as well as amortization of debt discount and premium and debt issuance costs as detailed in the table below:

*In millions*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Interest incurred for project financing and other interest expense | ​ | $5.0 | ​ | $1.9 | ​ | $9.0 | ​ | $3.8 |
| Interest expense and amortization of discount and issuance costs for Senior Notes issued by special purpose entity | ​ | ​ 2.2 | ​ | ​ 2.2 | ​ | ​ 4.4 | ​ | ​ 4.4 |
| **Total interest expense** | **​** | **$7.2** | **​** | **$4.1** | **​** | **$13.4** | **​** | **$8.2** |

Interest expense increased $3.1 million, or 75.6%, to $7.2 million during the three months ended June 30, 2023, as compared to $4.1 million in the same period in 2022. Interest expense increased $5.2 million, or 63.4%, to $13.4 million during the six months ended June 30, 2023, as compared to $8.2 million in the same period in 2022. The increase in interest expense is primarily related to the increase in project financing and higher interest rates. See Note 9. *Debt, Net* for additional information regarding project financing.

### Gain on Contributions to Unconsolidated Joint Ventures

Gain on contributions to unconsolidated joint ventures includes gain on land and additional infrastructure improvements contributed to our unconsolidated JVs as detailed in the table below. See Note 4. *Joint Ventures* for additional information.

*In millions*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Latitude Margaritaville Watersound JV (a) | ​ | $— | ​ | $0.1 | ​ | $0.6 | ​ | $0.2 |
| Electric Cart Watersound JV (b) | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ 0.4 |
| **Gain on Contributions to Unconsolidated Joint Ventures** | **​** | **$—** | **​** | **$0.1** | **​** | **$0.6** | **​** | **$0.6** |

(a) The three months ended June 30, 2023 and 2022, include a gain of less than $0.1 million, during each period, on additional infrastructure improvements contributed. The six months ended June 30, 2023 and 2022, include a gain of $0.6 million and $0.2 million, respectively, on additional infrastructure improvements contributed.

(b) The six months ended June 30, 2022, include a gain of $0.4 million on land contributed.

### Equity in Income from Unconsolidated Joint Ventures

Equity in income (loss) from unconsolidated joint ventures includes our proportionate share of earnings or losses of unconsolidated joint ventures accounted for by the equity method as detailed in the table below. See Note 4. *Joint Ventures* for additional information.

*In millions*

| ​ ​ ​ ​ | ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ ​ | ​ ​ 2022 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Latitude Margaritaville Watersound JV (a) | ​ | $5.9 | ​ | $0.9 | ​ | $9.8 | ​ | $0.3 |
| Sea Sound JV (b) | ​ | ​ — | ​ | ​ 0.1 | ​ | ​ (0.1) | ​ | ​ 0.1 |
| Watersound Fountains Independent Living JV | ​ | ​ (0.3) | ​ | ​ — | ​ | ​ (0.3) | ​ | ​ — |
| Pier Park TPS JV | ​ | ​ 0.1 | ​ | ​ 0.2 | ​ | ​ — | ​ | ​ 0.1 |
| Busy Bee JV | ​ | ​ 0.2 | ​ | ​ 0.2 | ​ | ​ 0.1 | ​ | ​ 0.4 |
| Electric Cart Watersound JV | ​ | ​ 0.1 | ​ | ​ — | ​ | ​ 0.1 | ​ | ​ — |
| Watersound Management JV | ​ | ​ — | ​ | ​ — | ​ | ​ 0.1 | ​ | ​ — |
| **Total equity in income from unconsolidated joint ventures** | **​** | **$6.0** | **​** | **$1.4** | **​** | **$9.7** | **​** | **$0.9** |

61

(a) During the three months ended June 30, 2023 and 2022, the Latitude Margaritaville Watersound JV completed 164 and 65 homes sale transactions, respectively. During the six months ended June 30, 2023 and 2022, the Latitude Margaritaville Watersound JV completed 313 and 83 homes sale transactions, respectively.

(b) In November 2022, the Sea Sound JV sold its assets to an unrelated third party and no longer has activity from operations. See Note 4. *Joint Ventures.*

### Other Income, Net

Other income, net primarily includes income from our retained interest investments, gain on insurance recoveries, loss from hurricane damage and other income and expense items as detailed in the table below:

*In millions*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Accretion income from retained interest investments | ​ | $1.1 | ​ | $0.4 | ​ | $1.5 | ​ | $0.8 |
| Gain on insurance recoveries | ​ | ​ — | ​ | ​ 2.6 | ​ | ​ — | ​ | ​ 3.3 |
| Loss from hurricane damage | ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ — |
| Miscellaneous income (expense), net | ​ | 0.4 | ​ | 1.3 | ​ | 0.6 | ​ | (0.2) |
| **Other income, net** | **​** | **$1.5** | **​** | **$4.3** | **​** | **$2.1** | **​** | **$3.9** |

Other income, net decreased $2.8 million to $1.5 million during the three months ended June 30, 2023, as compared to $4.3 million in the same period in 2022. Other income, net decreased $1.8 million to $2.1 million during the six months ended June 30, 2023, as compared to $3.9 million in the same period in 2022. Accretion income from retained interest investments increased $0.7 million during both the three and six months ended June 30, 2023, due to an agreement by all parties during the second quarter of 2023 for an optional prepayment of the related bonds, in full, in August 2023, prior to the installment notes’ scheduled maturity in 2024. See Note 8. *Other Assets* for additional information. The three and six months ended June 30, 2022, include a gain on insurance recovery of $2.6 million and $3.3 million, respectively, and loss from hurricane damage of less than $0.1 million during each period related to Hurricane Michael. In November 2022, we closed out the insurance claim related to Hurricane Michael and therefore will not receive additional proceeds in future periods.

Miscellaneous income (expense), net during the three and six months ended June 30, 2023, includes $0.5 million of income received from the Florida Division of Emergency Management’s TRBG program for recovery of lost income related to timber crop that was destroyed as a result of Hurricane Michael. Miscellaneous income (expense), net during the six months ended June 30, 2023, also includes a $0.5 million gain on retained interest investment. Miscellaneous income (expense), net during the three and six months ended June 30, 2022, includes a $0.7 million gain on retained interest investment during each period and $0.6 million and $1.0 million, respectively, received from the Pier Park CDD for repayment of subordinated notes. Miscellaneous income (expense), net during the six months ended June 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.

### Income Tax Expense

Income tax expense was $11.5 million during the three months ended June 30, 2023, as compared to $5.9 million during the same period in 2022. Our effective tax rate was 24.9% for the three months ended June 30, 2023, as compared to 25.9% during the same period in 2022.

Income tax expense was $14.9 million during the six months ended June 30, 2023, as compared to $10.5 million during the same period in 2022. Our effective tax rate was 24.9% for the six months ended June 30, 2023, as compared to 25.6% during the same period in 2022.

Our effective rate for the three and six months ended June 30, 2023 and 2022, differed from the federal statutory rate of 21.0% primarily due to state income taxes, tax credits and other permanent items. See Note 12. *Income Taxes* for additional information.

### Segment Results

### Residential

The table below sets forth the consolidated results of operations of our residential segment:

*In millions*

| ​ ​ ​ ​ Revenue: | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Real estate revenue | ​ | $59.9 | ​ | $20.8 | ​ | $86.1 | ​ | $51.2 |
| Other revenue | ​ | 3.5 | ​ | 2.2 | ​ | 5.3 | ​ | 4.5 |
| Total revenue | ​ | 63.4 | ​ | 23.0 | ​ | 91.4 | ​ | 55.7 |
| **Expenses:** | ​ |  | ​ |  | ​ |  | ​ |  |
| Cost of real estate and other revenue | ​ | 29.3 | ​ | 11.9 | ​ | 45.5 | ​ | 25.7 |
| Other operating expenses | ​ | 0.9 | ​ | 1.1 | ​ | 1.9 | ​ | 2.0 |
| Depreciation, depletion and amortization | ​ | — | ​ | — | ​ | 0.1 | ​ | 0.1 |
| Total expenses | ​ | 30.2 | ​ | 13.0 | ​ | 47.5 | ​ | 27.8 |
| Operating income | ​ | 33.2 | ​ | 10.0 | ​ | 43.9 | ​ | 27.9 |
| Other income (expense): | ​ |  | ​ |  | ​ |  | ​ |  |
| Investment income, net | ​ | ​ 0.4 | ​ | ​ 0.2 | ​ | ​ 0.9 | ​ | ​ 0.4 |
| Interest expense | ​ | (0.1) | ​ | (0.1) | ​ | (0.2) | ​ | (0.2) |
| Gain on contributions to unconsolidated joint ventures | ​ | ​ — | ​ | ​ 0.1 | ​ | ​ 0.6 | ​ | ​ 0.1 |
| Equity in income from unconsolidated joint ventures | ​ | ​ 5.9 | ​ | ​ 0.9 | ​ | ​ 9.8 | ​ | ​ 0.3 |
| Other income (expense), net | ​ | 0.1 | ​ | 0.3 | ​ | 0.1 | ​ | (0.6) |
| Total other income, net | ​ | 6.3 | ​ | 1.4 | ​ | 11.2 | ​ | — |
| **Income before income taxes** | **​** | **$39.5** | **​** | **$11.4** | **​** | **$55.1** | **​** | **$27.9** |

Real estate revenue includes sales of homesites and other residential land and certain homesite residuals from homebuilder sales that provide us a percentage of the sale price of the completed home if the home price exceeds a negotiated threshold. Other revenue includes tap and impact fee credits sold and marketing fees. Certain homesite residuals and other revenue related to homebuilder homesite sales are recognized in revenue at the point in time of the closing of the sale. For the three months ended June 30, 2023 and 2022, real estate revenue includes estimated homesite residuals of $11.9 million and $0.7 million, respectively, and other revenue includes estimated fees related to homebuilder homesite sales of $1.8 million and $0.3 million, respectively. For the six months ended June 30, 2023 and 2022, real estate revenue includes estimated homesite residuals of $15.1 million and $2.6 million, respectively, and other revenue includes estimated fees related to homebuilder homesite sales of $2.9 million and $0.8 million, respectively. The increase in estimated homesite residuals and fees related to homebuilder homesite sales was due to the mix and number of homesites sold per community in the current period. Cost of real estate revenue includes direct costs (e.g., development and construction costs), selling costs and other indirect costs.

#### Three months ended June 30, 2023 compared to the three months ended June 30, 2022

The following table sets forth our consolidated residential real estate revenue and cost of revenue activity:

*Dollars in millions*

| ​ ​ ​ ​ ​ Consolidated | ​ ​ ​ ​ ​ | ​ Three Months Ended June 30, 2023 Unit Sold ​ | ​ ​ ​ | ​ ​ ​ ​ Revenue ​ ​ | ​ ​ ​ | ​ ​ Cost of Revenue ​ ​ | ​ ​ ​ | ​ ​ Gross Profit ​ ​ | ​ ​ ​ | ​ ​ ​ Gross ​ Margin ​ ​ ​ | ​ Three Months Ended June 30, 2022 Units Sold ​ | ​ ​ ​ | ​ ​ ​ ​ Revenue ​ ​ | ​ ​ ​ | ​ ​ Cost of Revenue ​ ​ | ​ ​ ​ | ​ ​ Gross Profit ​ ​ | ​ ​ ​ | ​ ​ Gross Margin ​ ​ |
| --- | --- | ---: | --- | --- | --- | --- | --- | --- | --- | --- | ---: | --- | --- | --- | --- | --- | --- | --- | --- |
| Homesites (a) |  | 300 | ​ | $59.9 | ​ | $27.7 | ​ | $32.2 |  | 53.8% | 231 | ​ | $20.7 | ​ | $11.1 | ​ | $9.6 | ​ | 46.4% |
| Land sale |  | N/A | ​ | — | ​ | — | ​ | — |  | N/A% | N/A | ​ | ​ 0.1 | ​ | ​ — | ​ | ​ 0.1 | ​ | 100.0% |
| **Total consolidated** |  | **300** | **​** | **$59.9** | **​** | **$27.7** | **​** | **$32.2** |  | **53.8%** | **231** | **​** | **$20.8** | **​** | **$11.1** | **​** | **$9.7** |  | **46.6%** |
| **​** | **​** | **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| **Unconsolidated** | **​** | **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | ​ | ​ ​ |
| Homes (b) | **​** | **164** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | 65 | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | ​ | ​ ​ |
| **Total consolidated and unconsolidated** | **​** | **464** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **296** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | ​ | ​ ​ |

(a) The three months ended June 30, 2022, includes 42 entitled but undeveloped homesites sold within the SouthWood community.

(b) Includes homes sold by the Latitude Margaritaville Watersound JV, which is unconsolidated and is accounted for under the equity method of accounting. See Note 4. *Joint Ventures* for additional information.

The following discussion sets forth details of the consolidated results of operations of our residential segment.

*Homesites*. Revenue from homesite sales increased $39.2 million, or 189.4%, during the three months ended June 30, 2023, as compared to the same period in 2022, primarily due to the mix and number of homesites sold per community and the timing of homebuilder contractual closing obligations in our residential communities. During the three months ended June 30, 2023 and 2022, the average base revenue, excluding homesite residuals, per homesite sold was approximately $153,000 and $83,000, respectively. The increase in average base revenue per homesite sold during the current period was due to the mix of sales from different communities, primarily from sales in the Watersound Camp Creek and Watersound Origins communities, which had a higher volume during the current period. The prior period homesite sales also include the sale of 42 entitled but undeveloped homesites sold within the SouthWood community, which reduced the average price per homesite. Gross margin increased to 53.8% during the three months ended June 30, 2023, as compared to 46.4% during the same period in 2022, primarily due to the mix and number of homesites sold from different communities during each respective period. Gross margin may vary each period depending on the location of homesite sales.

*Land sales.* During the three months ended June 30, 2022, we had unimproved residential land sales for $0.1 million, with de minimis cost of revenue.

Other operating expenses include salaries and benefits, property taxes, marketing, professional fees, project administration, owner association and CDD assessments and other administrative expenses.

Investment income, net primarily consists of interest earned on our notes receivable and unimproved land contribution to our unconsolidated Latitude Margaritaville Watersound JV as home sales are transacted in the community. See Note 4. *Joint Ventures* for additional information. Interest expense primarily consists of interest incurred on our portion of the total outstanding CDD debt. See Note 9. *Debt, Net* for additional information.

Gain on contributions to unconsolidated joint ventures for both the three months ended June 30, 2023 and 2022, includes a gain of less than $0.1 million on additional infrastructure improvements contributed to our unconsolidated Latitude Margaritaville Watersound JV. See Note 4. *Joint Ventures* for additional information.

Equity in income from unconsolidated joint ventures includes our proportionate share of earnings or losses of unconsolidated joint ventures accounted for by the equity method. Equity in income from unconsolidated joint ventures increased $5.0 million during the three months ended June 30, 2023, as compared to the same period in 2022. The increase was due to the completion of 164 home sale transactions by the Latitude Margaritaville Watersound JV during the three months ended June 30, 2023, compared to 65 home sale transactions during the same period in 2022. See Note 4. *Joint Ventures* for additional information.

#### Six months ended June 30, 2023 compared to the six months ended June 30, 2022

The following table sets forth our consolidated residential real estate revenue and cost of revenue activity:

*Dollars in millions*

| ​ ​ ​ ​ ​ Consolidated | ​ ​ ​ ​ ​ | ​ Six Months Ended June 30, 2023 Units Sold ​ | ​ ​ ​ | ​ ​ ​ ​ Revenue ​ ​ | ​ ​ ​ | ​ ​ Cost of Revenue ​ ​ | ​ ​ ​ | ​ ​ Gross Profit ​ ​ | ​ ​ ​ | ​ ​ ​ Gross ​ Margin ​ ​ ​ | ​ Six Months Ended June 30, 2022 Units Sold ​ | ​ ​ ​ | ​ ​ ​ ​ Revenue ​ ​ | ​ ​ ​ | ​ ​ Cost of Revenue ​ ​ | ​ ​ ​ | ​ ​ Gross Profit ​ ​ | ​ ​ ​ | ​ ​ Gross Margin ​ ​ |
| --- | --- | ---: | --- | --- | --- | --- | --- | --- | --- | --- | ---: | --- | --- | --- | --- | --- | --- | --- | --- |
| Homesites (a) | ​ | 627 | ​ | $85.5 | ​ | $42.8 | ​ | $42.7 | ​ | 49.9% | 412 | ​ | $51.1 | ​ | $24.0 | ​ | $27.1 | ​ | 53.0% |
| Land sales |  | N/A | ​ | ​ 0.6 | ​ | ​ 0.1 | ​ | ​ 0.5 | ​ | 83.3% | N/A | ​ | ​ 0.1 | ​ | ​ — | ​ | ​ 0.1 | ​ | 100.0% |
| **Total consolidated** |  | **627** | **​** | **$86.1** | **​** | **$42.9** | **​** | **$43.2** |  | **50.2%** | **412** | **​** | **$51.2** | **​** | **$24.0** | **​** | **$27.2** |  | **53.1%** |
| **​** | **​** | **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| **Unconsolidated** | **​** | **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |
| Homes (b) | ​ | 313 | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | 83 | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| **Total consolidated and unconsolidated** | **​** | **940** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **495** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** | **​** | **​** **​** |

(a) The six months ended June 30, 2023 and 2022, includes 100 and 42 entitled but undeveloped homesites, respectively, sold within the SouthWood community.

(b) Includes homes sold by the Latitude Margaritaville Watersound JV, which is unconsolidated and is accounted for under the equity method of accounting. See Note 4. *Joint Ventures* for additional information.

The following discussion sets forth details of the consolidated results of operations of our residential segment.

*Homesites*. Revenue from homesite sales increased $34.4 million, or 67.3%, during the six months ended June 30, 2023, as compared to the same period in 2022, primarily due to the mix and number of homesites sold per community and the timing of homebuilder contractual closing obligations in our residential communities. During the six months ended June 30, 2023 and 2022, the average base revenue, excluding homesite residuals, per homesite sold was approximately $105,000 and $113,000, respectively. The decrease in average base revenue per homesite sold during the current period was due to the mix of sales from different communities. The current period homesite sales also include the sale of 100 entitled but undeveloped homesites sold within the SouthWood community, compared to 42 in the prior period, which reduced the average price per homesite. Gross margin decreased to 49.9% during the six months ended June 30, 2023, as compared to 53.0% during the same period in 2022, primarily due to the mix and number of homesites sold from different communities during each respective period. Gross margin may vary each period depending on the location of homesite sales.

*Land sales.* During the six months ended June 30, 2023, we had unimproved residential land sales for $0.6 million, resulting in a gross margin of approximately 83.3%. During the six months ended June 30, 2022, we had unimproved residential land sales for $0.1 million, with de minimis cost of revenue.

Other operating expenses include salaries and benefits, property taxes, marketing, professional fees, project administration, owner association and CDD assessments and other administrative expenses.

Investment income, net primarily consists of interest earned on our notes receivable and unimproved land contribution to our unconsolidated Latitude Margaritaville Watersound JV as home sales are transacted in the community. See Note 4. *Joint Ventures* and Note 18. *Commitments and Contingencies* for additional information. Interest expense primarily consists of interest incurred on our portion of the total outstanding CDD debt. See Note 9. *Debt, Net* for additional information.

Gain on contributions to unconsolidated joint ventures for the six months ended June 30, 2023 and 2022, includes a gain of $0.6 million and $0.1 million, respectively, on additional infrastructure improvements contributed to our unconsolidated Latitude Margaritaville Watersound JV. See Note 4. *Joint Ventures* for additional information.

Equity in income from unconsolidated joint ventures includes our proportionate share of earnings or losses of unconsolidated joint ventures accounted for by the equity method. Equity in income from unconsolidated joint ventures increased $9.5 million during the six months ended June 30, 2023, as compared to the same period in 2022. The increase was due to the completion of 313 home sale transactions by the Latitude Margaritaville Watersound JV during the six months ended June 30, 2023, compared to 83 home sale transactions during the same period in 2022. See Note 4. *Joint Ventures* for additional information.

Other income (expense), net for the six months ended June 30, 2022 includes $1.0 million of design costs no longer pursued.

### Hospitality

The table below sets forth the consolidated results of operations of our hospitality segment:

*In millions*

| ​ ​ ​ ​ Revenue: | ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ | ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ | ​ | ​ ​ 2022 ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Hospitality revenue | ​ | $45.1 | ​ | $29.3 | ​ | $69.6 | ​ | $45.5 |
| Leasing revenue | ​ | ​ 0.5 | ​ | ​ — | ​ | ​ 0.9 | ​ | ​ 0.1 |
| Total revenue | ​ | ​ 45.6 | ​ | ​ 29.3 | ​ | ​ 70.5 | ​ | ​ 45.6 |
| **Expenses:** | ​ |  | ​ |  | ​ |  | ​ |  |
| Cost of hospitality revenue | ​ | 33.3 | ​ | 21.2 | ​ | 56.2 | ​ | 35.9 |
| Cost of leasing revenue | ​ | 0.7 | ​ | 0.1 | ​ | 1.1 | ​ | 0.2 |
| Other operating expenses | ​ | 0.3 | ​ | 0.3 | ​ | 0.6 | ​ | 0.6 |
| Depreciation, depletion and amortization | ​ | 5.5 | ​ | 2.3 | ​ | 9.0 | ​ | 4.1 |
| Total expenses | ​ | 39.8 | ​ | 23.9 | ​ | 66.9 | ​ | 40.8 |
| Operating income | **​** | 5.8 | ​ | 5.4 | ​ | 3.6 | ​ | 4.8 |
| Other (expense) income: | ​ |  | ​ |  | ​ |  | ​ |  |
| Interest expense | ​ | ​ (2.2) | ​ | ​ (0.3) | ​ | ​ (3.4) | ​ | ​ (0.5) |
| Other income, net | ​ | — | ​ | 0.6 | ​ | — | ​ | 0.4 |
| Total other (expense) income, net | ​ | (2.2) | ​ | 0.3 | ​ | (3.4) | ​ | (0.1) |
| **Income before income taxes** | **​** | **$3.6** | **​** | **$5.7** | **​** | **$0.2** | **​** | **$4.7** |

#### Three months ended June 30, 2023 compared to the three months ended June 30, 2022

The following table sets forth details of our hospitality segment consolidated revenue and cost of revenue:

*In millions*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ ​ Revenue | ​ ​ ​ | ​ ​ Gross Profit | ​ ​ ​ | ​ ​ ​ Gross ​ Margin ​ | ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2022 ​ ​ Revenue | ​ ​ ​ | ​ ​ Gross Profit | ​ ​ ​ | ​ ​ Gross ​ Margin |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Clubs (a) | ​ | $13.3 | ​ | $3.7 |  | 27.8% | ​ | $10.9 | ​ | $3.1 |  | 28.4% |
| Hotels | ​ | ​ 28.1 | ​ | ​ 7.1 | ​ | 25.3% | ​ | ​ 15.6 | ​ | ​ 4.6 | ​ | 29.5% |
| Other | ​ | 3.7 | ​ | 1.0 |  | 27.0% | ​ | 2.8 | ​ | 0.4 |  | 14.3% |
| **Total** | **​** | **$45.1** | **​** | **$11.8** |  | **26.2%** | **​** | **$29.3** | **​** | **$8.1** |  | **27.6%** |

(a) Includes the Camp Creek Inn due to its proximity and guest access to Watersound Club amenities. The hotel was completed and partially open in June 2023, with rooms available for occupancy in July 2023.

Revenue from our clubs increased $2.4 million, or 22.0%, during the three months ended June 30, 2023, as compared to the same period in 2022. The increase in revenue in the current period was due to increases in the number of club members and membership revenue, as well as the opening of new Camp Creek amenities in April 2023. Our clubs gross margin was 27.8% during the three months ended June 30, 2023, compared to 28.4% during the same period in 2022.

Revenue from our hotel operations increased $12.5 million, or 80.1%, during the three months ended June 30, 2023, as compared to the same period in 2022. The increase was primarily due to an increase in lodging revenue from The Pearl Hotel, which we acquired in December 2022; Embassy Suites by Hilton Panama City Beach Resort, which opened in April 2023; The Lodge 30A, which opened in February 2023; Home2 Suites by Hilton Santa Rosa Beach and Hotel Indigo Panama City Marina, which both opened in June 2023; Homewood Suites by Hilton Panama City Beach, which opened in March 2022; and new WaterColor Inn suites, which opened in June 2022. Hotels had a gross margin of 25.3% for the three months ended June 30, 2023, compared to 29.5% during the same period in 2022. The decrease in gross margin was primarily due to the opening costs associated with the opening of new hotels in the current period.

Revenue from other hospitality operations increased $0.9 million, or 32.1%, during the three months ended June 30, 2023, as compared to the same period in 2022. The increase in other hospitality revenue was primarily related to revenue from a new standalone restaurant, which opened in August 2022, Point South Marina Bay Point, which reopened in the third quarter of 2022 and Point South Marina Port St. Joe, which reopened in the fourth quarter of 2022. Our other hospitality operations had a gross margin of 27.0% during the three months ended June 30, 2023, compared to 14.3% during the same period in 2022. The increase in gross margin was due to new assets being operational in the current period, compared to the prior period. We had minimal revenue from our marinas during the three months ended June 30, 2022, due to reconstruction after Hurricane Michael.

Leasing revenue includes marina boat slip and dry storage rentals.

Other operating expenses include salaries and benefits, professional fees and other administrative expenses.

The increase of $3.2 million in depreciation, depletion and amortization expense during the three months ended June 30, 2023, as compared to the same period in 2022, was primarily due to new properties placed in service.

Interest expense primarily includes interest incurred from our hospitality project financing. The increase of $1.9 million in interest expense during the three months ended June 30, 2023, as compared to the same period in 2022, was primarily due to an increase in project financing and higher interest rates. See Note 9. *Debt, Net* for additional information.

Other income, net for the three months ended June 30, 2022, includes $0.6 million of income received from the Pier Park CDD for repayment of subordinated notes.

#### Six months ended June 30, 2023 compared to the six months ended June 30, 2022

The following table sets forth details of our hospitality segment consolidated revenue and cost of revenue:

*In millions*

| ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ ​ Revenue | ​ ​ ​ | ​ ​ Gross Profit | ​ ​ ​ | ​ ​ ​ Gross ​ Margin ​ | ​ ​ ​ ​ | ​ ​ Six Months Ended June 30, 2022 ​ ​ Revenue | ​ ​ ​ | ​ ​ Gross Profit | ​ ​ ​ | ​ ​ Gross ​ Margin ​ |
| --- | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Clubs (a) | ​ | $23.4 | ​ | $6.9 |  | 29.5% | ​ | $19.7 | ​ | $5.5 |  | 27.9% |
| Hotels | ​ | ​ 40.4 | ​ | ​ 5.5 | ​ | 13.6% | ​ | ​ 21.6 | ​ | ​ 3.9 | ​ | 18.1% |
| Other | ​ | ​ 5.8 | ​ | ​ 1.0 | ​ | 17.2% | ​ | ​ 4.2 | ​ | ​ 0.2 | ​ | 4.8% |
| **Total** | **​** | **$69.6** | **​** | **$13.4** |  | **19.3%** | **​** | **$45.5** | **​** | **$9.6** |  | **21.1%** |

(a) Includes the Camp Creek Inn due to its proximity and guest access to Watersound Club amenities. The hotel was completed and partially open in June 2023, with rooms available for occupancy in July 2023.

Revenue from our clubs increased $3.7 million, or 18.8%, during the six months ended June 30, 2023, as compared to the same period in 2022. The increase in revenue in the current period was due to increases in the number of club members and membership revenue, as well as the opening of new Camp Creek amenities in April 2023. As of June 30, 2023, Watersound Club had 2,853 members, compared with 2,488 members as of June 30, 2022, an increase of 365 members. Our clubs gross margin was 29.5% during the six months ended June 30, 2023, compared to 27.9% during the same period in 2022. The increase in gross margin was due to the increase in the number of members and members’ club usage.

Revenue from our hotel operations increased $18.8 million, or 87.0%, during the six months ended June 30, 2023, as compared to the same period in 2022. The increase was primarily due to an increase in lodging revenue from The Pearl Hotel, which we acquired in December 2022; Embassy Suites by Hilton Panama City Beach Resort, which opened in April 2023; The Lodge 30A, which opened in February 2023; Home2 Suites by Hilton Santa Rosa Beach and Hotel Indigo Panama City Marina, which both opened in June 2023; Homewood Suites by Hilton Panama City Beach, which opened in March 2022; and new WaterColor Inn suites, which opened in June 2022. Hotels had a gross margin of 13.6% for the six months ended June 30, 2023, compared to 18.1% during the same period in 2022. The decrease in gross margin was primarily due to the opening costs associated with the opening of new hotels in the current period.

Revenue from other hospitality operations increased $1.6 million, or 38.1%, during the six months ended June 30, 2023, as compared to the same period in 2022. The increase in other hospitality revenue was primarily related to revenue from a new standalone restaurant, which opened in August 2022, Point South Marina Bay Point, which reopened in the third quarter of 2022 and Point South Marina Port St. Joe, which reopened in the fourth quarter of 2022. Our other hospitality operations had a gross margin of 17.2% during the six months ended June 30, 2023, compared to 4.8% during the same period in 2022. The increase in gross margin was due to new assets being operational in the current period, compared to the prior period. We had minimal revenue from our marinas during the six months ended June 30, 2022, due to reconstruction after Hurricane Michael.

Leasing revenue includes marina boat slip and dry storage rentals.

Other operating expenses include salaries and benefits, professional fees and other administrative expenses.

The increase of $4.9 million in depreciation, depletion and amortization expense during the six months ended June 30, 2023, as compared to the same period in 2022, was primarily due to new properties placed in service.

Interest expense primarily includes interest incurred from our hospitality project financing. The increase of $2.9 million in interest expense during the six months ended June 30, 2023, as compared to the same period in 2022, was primarily due to an increase in project financing and higher interest rates. See Note 9. *Debt, Net* for additional information.

Other expense, net for the six months ended June 30, 2022, includes $1.0 million of income received from the Pier Park CDD for repayment of subordinated notes, partially offset by $0.6 million of expense for a homeowner’s association special assessment.

### Commercial

The table below sets forth the consolidated results of operations of our commercial segment:

*In millions*

| ​ ​ ​ ​ ​ ​ ​ Revenue: Leasing revenue ​ | ​ ​ Three Months Ended June 30, 2023 ​ ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ ​ | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ ​ |
| --- | ---: | --- | ---: | --- | ---: | --- | ---: |
| Commercial leasing revenue ​ | $5.2 | ​ | $4.9 | ​ | $10.6 | ​ | $9.4 |
| Multi-family leasing revenue ​ | ​ 4.7 | ​ | ​ 3.4 | ​ | ​ 9.0 | ​ | ​ 6.6 |
| Senior living leasing revenue ​ | ​ 1.9 | ​ | ​ 1.0 | ​ | ​ 3.6 | ​ | ​ 2.0 |
| Total leasing revenue ​ | ​ 11.8 | ​ | ​ 9.3 | ​ | ​ 23.2 | ​ | ​ 18.0 |
| Commercial and rural real estate revenue ​ | 5.2 | ​ | 4.5 | ​ | 11.1 | ​ | 8.1 |
| Timber revenue ​ | ​ 1.3 | ​ | ​ 1.3 | ​ | ​ 3.0 | ​ | ​ 4.3 |
| Hospitality revenue ​ | ​ — | ​ | ​ 0.2 | ​ | ​ — | ​ | ​ 0.3 |
| Total revenue ​ | 18.3 | ​ | 15.3 | ​ | 37.3 | ​ | 30.7 |
| **Expenses:** |  | ​ |  | ​ |  | ​ |  |
| Cost of leasing revenue ​ | 5.8 | ​ | 3.8 | ​ | 10.7 | ​ | 7.4 |
| Cost of commercial and rural real estate revenue ​ | 1.4 | ​ | 0.5 | ​ | 4.7 | ​ | 1.6 |
| Cost of timber revenue ​ | ​ 0.2 | ​ | ​ 0.2 | ​ | ​ 0.4 | ​ | ​ 0.4 |
| Cost of hospitality revenue ​ | ​ — | ​ | ​ 0.2 | ​ | ​ — | ​ | ​ 0.4 |
| Other operating expenses ​ | 1.1 | ​ | 1.0 | ​ | 2.2 | ​ | 2.1 |
| Depreciation, depletion and amortization ​ | 3.8 | ​ | 3.1 | ​ | 7.5 | ​ | 6.1 |
| Total expenses ​ | 12.3 | ​ | 8.8 | ​ | 25.5 | ​ | 18.0 |
| Operating income ​ | 6.0 | ​ | 6.5 | ​ | 11.8 | ​ | 12.7 |
| Other (expense) income: ​ | ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Interest expense ​ | (2.7) | ​ | (1.4) | ​ | (5.4) | ​ | (3.0) |
| Gain on contributions to unconsolidated joint ventures ​ | ​ — | ​ | ​ — | ​ | ​ — | ​ | ​ 0.4 |
| Equity in income (loss) from unconsolidated joint ventures ​ | ​ 0.1 | ​ | ​ 0.5 | ​ | ​ (0.1) | ​ | ​ 0.6 |
| Other income (expense), net ​ | 0.3 | ​ | (0.3) | ​ | 0.2 | ​ | (0.6) |
| Total other expense, net ​ | (2.3) | ​ | (1.2) | ​ | (5.3) | ​ | (2.6) |
| **Income before income taxes** **​** | **$3.7** | **​** | **$5.3** | **​** | **$6.5** | **​** | **$10.1** |

#### Three months ended June 30, 2023 compared to the three months ended June 30, 2022

The following table sets forth details of our commercial segment consolidated revenue and cost of revenue:

*In millions*

| ​ ​ ​ ​ ​ Leasing | ​ ​ ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 ​ ​ Revenue ​ ​ | ​ ​ ​ ​ | ​ ​ Gross Profit ​ ​ | ​ ​ ​ ​ | ​ ​ ​ Gross ​ Margin ​ ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2022 ​ ​ Revenue ​ ​ | ​ ​ ​ ​ | ​ ​ Gross Profit ​ ​ | ​ ​ ​ ​ | ​ ​ Gross ​ Margin ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | ---: | --- | --- | --- | --- | --- | ---: |
| Commercial leasing | ​ | $5.2 | ​ | $2.8 |  | 53.8% | ​ | $4.9 | ​ | $3.2 |  | 65.3% |
| Multi-family leasing | ​ | ​ 4.7 | ​ | ​ 2.7 |  | 57.4% | ​ | ​ 3.4 | ​ | ​ 2.2 |  | 64.7% |
| Senior living leasing | ​ | ​ 1.9 | ​ | ​ 0.5 | ​ | 26.3% | ​ | ​ 1.0 | ​ | ​ 0.1 | ​ | 10.0% |
| Total leasing | ​ | ​ 11.8 | ​ | ​ 6.0 | ​ | 50.8% | ​ | ​ 9.3 | ​ | ​ 5.5 | ​ | 59.1% |
| Commercial and rural real estate | ​ | ​ 5.2 | ​ | ​ 3.8 | ​ | 73.1% | ​ | ​ 4.5 | ​ | ​ 4.0 | ​ | 88.9% |
| Timber | ​ | ​ 1.3 | ​ | ​ 1.1 | ​ | 84.6% | ​ | ​ 1.3 | ​ | ​ 1.1 | ​ | 84.6% |
| Hospitality | ​ | ​ — | ​ | ​ — | ​ | N/A% | ​ | ​ 0.2 | ​ | ​ — | ​ | —% |
| **Total** | **​** | **$18.3** | **​** | **$10.9** |  | **59.6%** | **​** | **$15.3** | **​** | **$10.6** |  | 69.3% |

The following discussion sets forth details of the consolidated results of operations of our commercial segment.

Total leasing revenue increased $2.5 million, or 26.9%, during the three months ended June 30, 2023, as compared to the same period in 2022. The increase was primarily due to new multi-family and senior living leases, as well as other new leases. Leasing gross margin decreased to 50.8% during the three months ended June 30, 2023, as compared to 59.1% during the same period in 2022, primarily due to increased operating costs, as well as start-up and lease-up expenses in the current period.

During the three months ended June 30, 2023, we had seven commercial and rural real estate sales totaling approximately 130 acres for $5.1 million and land improvement services of $0.1 million, together resulting in a gross margin of approximately 73.1%. During the three months ended June 30, 2022, we had six commercial and rural real estate sales totaling approximately 163 acres for $4.0 million and land improvement services of $0.5 million, together resulting in a gross margin of approximately 88.9%.

Timber revenue and gross margin for the three months ended June 30, 2023 and 2022, were similar. Timber revenue in the current period included a decrease in prices, which was offset by an increase in tons of wood products sold. There were 72,000 tons of wood products sold during the three months ended June 30, 2023, as compared to 46,000 tons of wood products sold during the same period in 2022. The average price of wood product sold decreased to $16.08 per ton during the three months ended June 30, 2023, as compared to $25.14 per ton during the same period in 2022.

Hospitality revenue includes some of our short-term vacation rentals.

Other operating expenses include salaries and benefits, property taxes, CDD assessments, professional fees, marketing, project administration and other administrative expenses.

The increase of $0.7 million in depreciation, depletion and amortization expense during the three months ended June 30, 2023, as compared to the same period in 2022, was primarily due to new properties placed in service.

Interest expense primarily includes interest incurred from our commercial project financing and CDD debt. The increase of $1.3 million in interest expense during the three months ended June 30, 2023, as compared to the same period in 2022, was primarily due to an increase in project financing and higher interest rates. See Note 9. *Debt, Net* for additional information.

Equity in income (loss) from unconsolidated joint ventures includes our proportionate share of earnings or losses of unconsolidated JVs accounted for by the equity method. See Note 4. *Joint Ventures* for additional information.

#### Six months ended June 30, 2023 compared to the six months ended June 30, 2022

The following table sets forth details of our commercial segment consolidated revenue and cost of revenue:

*In millions*

| ​ ​ ​ ​ ​ ​ Leasing | ​ ​ ​ ​ ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 ​ ​ ​ ​ Revenue ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Gross Profit ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ ​ Gross ​ Margin ​ ​ ​ | ​ ​ ​ ​ ​ ​ | ​ ​ Six Months Ended June 30, 2022 ​ ​ ​ ​ Revenue ​ ​ | ​ ​ ​ ​ ​ | ​ ​ Gross Profit (Deficit) ​ ​ | ​ ​ ​ ​ ​ | ​ ​ ​ ​ Gross ​ Margin ​ ​ ​ |
| --- | --- | --- | --- | --- | --- | ---: | --- | --- | --- | --- | --- | ---: |
| Commercial leasing | ​ | $10.6 | ​ | $6.4 |  | 60.4% | ​ | $9.4 | ​ | $6.1 |  | 64.9% |
| Multi-family leasing | ​ | ​ 9.0 | ​ | ​ 5.2 |  | 57.8% | ​ | ​ 6.6 | ​ | ​ 4.4 |  | 66.7% |
| Senior living leasing | ​ | ​ 3.6 | ​ | ​ 0.9 | ​ | 25.0% | ​ | ​ 2.0 | ​ | ​ 0.1 | ​ | 5.0% |
| Total leasing | ​ | ​ 23.2 | ​ | ​ 12.5 | ​ | 53.9% | ​ | ​ 18.0 | ​ | ​ 10.6 | ​ | 58.9% |
| Commercial and rural real estate | ​ | ​ 11.1 | ​ | ​ 6.4 | ​ | 57.7% | ​ | ​ 8.1 | ​ | ​ 6.5 | ​ | 80.2% |
| Timber | ​ | ​ 3.0 | ​ | ​ 2.6 | ​ | 86.7% | ​ | ​ 4.3 | ​ | ​ 3.9 | ​ | 90.7% |
| Hospitality | ​ | ​ — | ​ | ​ — | ​ | N/A% | ​ | ​ 0.3 | ​ | ​ (0.1) | ​ | (33.3)% |
| **Total** | **​** | **$37.3** | **​** | **$21.5** |  | **57.6%** | **​** | **$30.7** | **​** | **$20.9** |  | **68.1%** |

The following discussion sets forth details of the consolidated results of operations of our commercial segment.

Total leasing revenue increased $5.2 million, or 28.9%, during the six months ended June 30, 2023, as compared to the same period in 2022. The increase was primarily due to new multi-family and senior living leases, as well as other new leases. Total leasing gross margin decreased to 53.9% during the six months ended June 30, 2023, as compared to 58.9% during the same period in 2022, primarily due to increased operating costs, as well as start-up and lease-up expenses in the current period. As of June 30, 2023, we had net rentable square feet of approximately 1,041,000, of which approximately 1,016,000 square feet were under lease. As of June 30, 2022, we had net rentable square feet of approximately 981,000, of which approximately 909,000 square feet were under lease. As of June 30, 2023, our consolidated entities had 1,024 multi-family and senior living units completed, of which 909 were leased, compared to 743 multi-family and senior living units completed, of which 681 were leased as of June 30, 2022 (excludes multi-family units for the unconsolidated Sea Sound JV, which sold its assets in November 2022).

We believe the diversity of our commercial segment complements the growth of our residential and hospitality segments. Commercial and rural real estate revenue can vary depending on the proximity to developed areas and the mix and characteristics of commercial and rural real estate sold in each period, with varying compositions of retail, office, industrial, rural and other commercial uses. During the six months ended June 30, 2023, we had sixteen commercial and rural real estate sales totaling approximately 183 acres for $10.8 million and land improvement services of $0.3 million, together resulting in a gross margin of approximately 57.7%. During the six months ended June 30, 2022, we had twelve commercial and rural real estate sales totaling approximately 176 acres for $7.3 million and land improvement services of $0.8 million, together resulting in a gross margin of approximately 80.2%. As our focus continues to evolve more towards recurring revenue from leasing operations, we expect to have limited commercial and rural real estate sales. Further, we may continue to transform and operate commercial properties for higher and better use. This may result in certain assets moving from the commercial segment to the hospitality segment.

Timber revenue decreased $1.3 million, or 30.2%, to $3.0 million during the six months ended June 30, 2023, as compared to $4.3 million during the same period in 2022. The decrease was primarily due to a decrease in prices, partially offset by an increase in tons of wood products sold in the current period. There were 167,000 tons of wood products sold during the six months ended June 30, 2023, as compared to 153,000 tons of wood products sold during the same period in 2022. The average price of wood product sold decreased to $16.28 per ton during the six months ended June 30, 2023, as compared to $26.18 per ton during the same period in 2022. Timber gross margin was 86.7% during the six months ended June 30, 2023, as compared to 90.7% during the same period in 2022. The decrease was primarily due to the lower prices in the current period.

The total tons sold and relative percentage of total tons sold by major type of wood product are as follows:

| ​ ​ ​ ​ ​ | ​ ​ Three Months Ended June 30, 2023 | ​ ​ | ​ ​ 2022 | ​ ​ ​ | ​ ​ ​ ​ Six Months Ended June 30, 2023 | ​ ​ | ​ ​ 2022 | ​ ​ ​ |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Pine pulpwood | 29,000 | 40.3% | 25,000 | 54.4% | 77,000 | 46.1% | 80,000 | 52.3% |
| Pine sawtimber | 31,000 | 43.0% | 19,000 | 41.3% | 76,000 | 45.5% | 68,000 | 44.4% |
| Pine grade logs | 1,000 | 1.4% | — | —% | 2,000 | 1.2% | 2,000 | 1.3% |
| Other | 11,000 | 15.3% | 2,000 | 4.3% | 12,000 | 7.2% | 3,000 | 2.0% |
| **Total** | **72,000** | **100.0%** | **46,000** | **100.0%** | **167,000** | **100.0%** | **153,000** | **100.0%** |

Hospitality revenue includes some of our short-term vacation rentals.

Other operating expenses include salaries and benefits, property taxes, CDD assessments, professional fees, marketing, project administration and other administrative expenses.

The increase of $1.4 million in depreciation, depletion and amortization expense during the six months ended June 30, 2023, as compared to the same period in 2022, was primarily due to new properties placed in service.

Interest expense primarily includes interest incurred from our commercial project financing and CDD debt. The increase of $2.4 million in interest expense during the six months ended June 30, 2023, as compared to the same period in 2022, was primarily due to an increase in project financing and higher interest rates. See Note 9. *Debt, Net* for additional information.

Gain on contributions to unconsolidated joint ventures for the six months ended June 30, 2022, includes a gain of $0.4 million on land contributed to our unconsolidated Electric Cart Watersound JV. See Note 4. *Joint Ventures* for additional information.

Equity in income (loss) from unconsolidated joint ventures includes our proportionate share of earnings or losses of unconsolidated JVs accounted for by the equity method. See Note 4. *Joint Ventures* for additional information.

### Liquidity and Capital Resources

As of June 30, 2023, we had cash and cash equivalents and U.S. Treasury Bills classified as investments – debt securities of $88.6 million, compared to $78.3 million as of December 31, 2022. In addition to cash and cash equivalents, we consider our investments classified as available-for-sale securities (“Securities”), as being generally available to meet our liquidity needs. Securities are not as liquid as cash and cash equivalents, but they are generally convertible into cash within a relatively short period of time. See Note 5. *Investments* for additional information regarding our investments.

We believe that our current cash position, financing arrangements and cash generated from operations will provide us with sufficient liquidity to satisfy our anticipated working capital needs, expected capital expenditures, principal and interest payments on our long-term debt, capital contributions to JVs, Latitude JV Note commitment, authorized stock repurchases and authorized dividends for the next twelve months.

During the six months ended June 30, 2023, we invested a total of $130.5 million for capital expenditures, which includes $46.3 million for our residential segment, $44.1 million for our commercial segment, $39.7 million for our hospitality segment and $0.4 million for corporate expenditures. We anticipate that future capital commitments will be funded through cash generated from operations, new and existing financing arrangements, cash on hand and cash equivalents. As of June 30, 2023, we had a total of $56.7 million, primarily in construction and development related contractual obligations, of which a portion will be funded through committed or new financing arrangements. Capital expenditures and contractual obligations exclude amounts related to unconsolidated joint ventures. See Note 4. *Joint Ventures* for additional information.

As of June 30, 2023 and December 31, 2022, we had various loans outstanding totaling $452.6 million and $391.4 million, respectively, with maturities from May 2024 through March 2064. As of June 30, 2023, the weighted average effective interest rate of total outstanding debt was 5.2%, of which 67.5% of the debt outstanding includes fixed or swapped interest rates, and the average remaining life of debt outstanding was 17.7 years. As of June 30, 2023 the weighted average rate on our variable rate loans was 7.4%. See Note 9. *Debt, Net* for additional information.

In 2015, the Pier Park North JV entered into a $48.2 million loan. As of June 30, 2023 and December 31, 2022, $42.0 million and $42.6 million, respectively, was outstanding on the PPN JV Loan. The loan accrues interest at a rate of 4.1% per annum and matures in November 2025. In connection with the loan, we entered into a limited guarantee in favor of the lender, based on our percentage ownership of the JV. In addition, the guarantee can become full recourse in the case of any fraud or intentional misrepresentation by the Pier Park North JV; any voluntary transfer or encumbrance of the property in violation of the due-on-sale clause in the security instrument; upon commencement of voluntary bankruptcy or insolvency proceedings and upon breach of covenants in the security instrument. See Note 9. *Debt, Net* for additional information.

In 2018, the Pier Park Crossings JV entered into a $36.6 million loan, insured by HUD. As of June 30, 2023 and December 31, 2022, $34.9 million and $35.2 million, respectively, was outstanding on the PPC JV Loan. The loan bears interest at a rate of 3.1% and matures in June 2060. The loan includes a prepayment premium due to the lender of 2% - 10% for any additional principal that is prepaid through August 2031. The loan is secured by the real property and certain other Security Interests. See Note 9. *Debt, Net* for additional information.

In 2019, the Watersound Origins Crossings JV entered into a $44.0 million loan, as amended. In March 2023, the Watersound Origins Crossings JV refinanced the Watersound Origins Crossings JV Loan that increased the principal amount of the loan, which had a balance of $44.0 million at the time of the refinance, to $52.9 million, fixed the interest rate to 5.0% and provides for monthly payments of principal and interest through maturity in April 2058. The refinanced loan terms include a prepayment premium due to the lender of 1% - 10% for any principal that is prepaid through April 2033. As of June 30, 2023 and December 31, 2022, $52.8 million and $44.0 million, respectively, was outstanding on the Watersound Origins Crossings JV Loan. The refinanced loan is insured by HUD and is secured by the real property and certain other Security Interests. We incurred $0.9 million of additional loan cost due to the refinance. As a result of the refinance, the six months ended June 30, 2023, include a $0.1 million loss on early extinguishment of debt related to unamortized debt issuance costs, included within other income, net on the condensed consolidated statements of income. See Note 9. *Debt, Net* for additional information.

In 2019, the Watercrest JV entered into a $22.5 million loan. As of June 30, 2023 and December 31, 2022, $20.8 million and $21.0 million, respectively, was outstanding on the Watercrest JV Loan. The loan bears interest at a rate of LIBOR plus 2.2% and matures in June 2047. Effective July 1, 2023, the benchmark interest rate index based on LIBOR will transition to SOFR. The loan is secured by the real property and certain other Security Interests. In connection with the loan, we executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Watercrest JV Loan. We are the sole guarantor and receive a quarterly fee related to the guarantee from our JV partner based on the JV partner’s ownership percentage. See Note 9. *Debt, Net* for additional information.

In 2019, a wholly-owned subsidiary of ours entered into a $5.5 million loan, which is guaranteed by us. As of both June 30, 2023 and December 31, 2022, $5.0 million was outstanding on the Beckrich Building III Loan. The loan bears interest at a rate of LIBOR plus 1.7% and matures in August 2029. Effective July 1, 2023, the benchmark interest rate index based on LIBOR will transition to SOFR. The loan is secured by the real property and certain other Security Interests. See Note 9. *Debt, Net* for additional information.

In 2019, the Pier Park Crossings Phase II JV entered into a $22.9 million loan, insured by HUD, as amended. As of June 30, 2023 and December 31, 2022, $22.4 million and $22.6 million, respectively, was outstanding on the PPC II JV Loan. The PPC II JV Loan bears interest at a rate of 2.7% and matures in May 2057. The loan includes a prepayment premium due to the lender of 1% - 9% for any principal that is prepaid through May 2032. The loan is secured by the real property and certain other Security Interests. See Note 9. *Debt, Net* for additional information.

In 2020, a wholly-owned subsidiary of ours entered into a $15.3 million loan, which is guaranteed by us. As of both June 30, 2023 and December 31, 2022, $14.6 million was outstanding on the Airport Hotel Loan. The loan bears interest at LIBOR plus 2.0%, with a floor of 3.0%, and matures in March 2025. Effective July 1, 2023, the benchmark interest rate index based on LIBOR will transition to SOFR. The loan is secured by the real property and certain other Security Interests. See Note 9. *Debt, Net* for additional information.

In 2020, the Pier Park Resort Hotel JV entered into a loan with an initial amount of $52.5 million and up to a maximum of $60.0 million through additional earn-out requests. As of June 30, 2023 and December 31, 2022, $52.4 million and $45.2 million, respectively, was outstanding on the Pier Park Resort Hotel JV Loan. The loan matures in April 2027 and bears interest at a rate of SOFR plus 2.1%. The loan is secured by the real property and certain other Security Interests. In connection with the loan, as guarantors, we and our JV partner entered into a guarantee based on each partner’s ownership interest in favor of the lender, to guarantee the payment and performance of the borrower. As guarantor, our liability under the loan will be released upon reaching and maintaining certain debt service coverage for twelve months. In addition, the guarantee can become full recourse in the case of the failure of the guarantor to abide by or perform any of the covenants or warranties to be performed on the part of such guarantor. The Pier Park Resort Hotel JV entered into an interest rate swap to hedge cash flows tied to changes in the underlying floating interest rate tied to SOFR. The interest rate swap matures in April 2027 and fixed the variable rate on the notional amount of related debt, initially at $42.0 million, amortizing to $38.7 million at swap maturity, to a rate of 3.3%. See Note 6. *Financial Instruments and Fair Value Measurements* and Note 9. *Debt, Net* for additional information.

In 2020, a wholly-owned subsidiary of ours entered into a $16.8 million loan, which is guaranteed by us. As of June 30, 2023 and December 31, 2022, $16.2 million and $16.4 million, respectively, was outstanding on the Breakfast Point Hotel Loan. The loan matures in November 2042 and bears interest at a rate of 6.0% through November 2027 and the 1-year constant maturity Treasury rate plus 3.3% from December 2027 through November 2042, with a minimum rate of 6.0% throughout the term of the loan. The loan includes a prepayment premium due to the lender of 1% - 3% of the outstanding principal balance for any additional principal that is prepaid through November 2027. The loan is secured by the real property and certain other Security Interests. See Note 9. *Debt, Net* for additional information.

In 2020, a wholly-owned subsidiary of ours entered into a $5.8 million loan, which is guaranteed by us. As of both June 30, 2023 and December 31, 2022, $4.7 million was outstanding on the Self-Storage Facility Loan. The loan matures in November 2025 and bears interest at a rate of LIBOR plus 2.4%, with a floor of 2.9%. Effective July 1, 2023, the benchmark interest rate index based on LIBOR will transition to SOFR. The loan is secured by the real property and certain other Security Interests. Our liability as guarantor under the loan shall not exceed $2.9 million, plus any additional fees, with the project maintaining a certain debt service coverage. See Note 9. *Debt, Net* for additional information.

In 2021, The Lodge 30A JV entered into a $15.0 million loan. As of June 30, 2023 and December 31, 2022, $14.9 million and $13.3 million, respectively, was outstanding on the Lodge 30A JV Loan. The loan bears interest at a rate of 3.8% and matures in January 2028. The loan is secured by the real property and certain other Security Interests. In connection with the loan, we, wholly-owned subsidiaries of ours and our JV partner entered into a joint and several payment and performance guarantee in favor of the lender. Upon reaching a certain debt service coverage ratio for a minimum of twenty-four months, our liability as guarantor will be reduced to 75% of the outstanding principal amount for a twelve-month period. The debt service coverage ratio will be tested annually thereafter and will be reduced to 50% in year four and 25% in year five. We receive a monthly fee related to the guarantee from our JV partner based on the JV partner’s ownership percentage. See Note 9. *Debt, Net* for additional information.

In 2021, a wholly-owned subsidiary of ours entered into a $26.8 million loan, which is guaranteed by us. As of June 30, 2023 and December 31, 2022, $24.2 million and $18.2 million, respectively, was outstanding on the North Bay Landing Loan. The loan bears interest at a rate of LIBOR plus 2.5%, with a floor of 3.2%. Upon reaching a certain debt service coverage ratio, the loan will bear interest at a rate of LIBOR plus 2.3%, with a floor of 3.0%. Effective July 1, 2023, the benchmark interest rate index based on LIBOR will transition to SOFR. The loan matures in September 2024 and includes an option for an extension of the maturity date by eighteen months, subject to certain conditions. The loan is secured by the real property and certain other Security Interests. As guarantor, our liability under the loan will be reduced to 50% of the outstanding principal amount upon satisfaction of final advance conditions and reduced to 25% of the outstanding principal amount upon reaching and maintaining a certain debt service coverage ratio. In addition, the guarantee can become full recourse in the case of any fraud or intentional misrepresentation or failure to abide by other certain obligations on the part of such guarantor. See Note 9. *Debt, Net* for additional information. In May 2023, the Company began the process to refinance the North Bay Landing Loan with a loan commitment to be insured by HUD.

In 2021, a wholly-owned subsidiary of ours entered into a $28.0 million loan, which is guaranteed by us. As of June 30, 2023 and December 31, 2022, $28.0 million and $13.1 million, respectively, was outstanding on the Watersound Camp Creek Loan. The loan matures in December 2047. In February 2023, the loan was amended, which modified the interest rate from LIBOR plus 2.1%, with a floor of 2.6%, to SOFR plus 2.1%, with a floor of 2.6%. The loan is secured by the real property and certain other Security Interests. As guarantor, our liability under the loan will be reduced to 50% of the outstanding principal amount upon the project reaching and maintaining a trailing six months of operations with a certain debt service coverage ratio and reduced to 25% of the outstanding principal amount upon reaching and maintaining a trailing twelve months of operations with a certain debt service coverage ratio. In addition, the guarantee can become full recourse in the case of the failure of guarantor to abide by or perform any of the covenants, warranties or other certain obligations to be performed on the part of such guarantor. See Note 9. *Debt, Net* for additional information.

In 2021, a wholly-owned subsidiary of ours entered into a $12.0 million loan, which is guaranteed by us. As of June 30, 2023 and December 31, 2022, $10.6 million and $11.4 million, respectively, was outstanding on the Watersound Town Center Grocery Loan. The loan bears interest at LIBOR plus 2.0%, with a floor of 2.2%, and matures in August 2031. Effective July 1, 2023, the benchmark interest rate index based on LIBOR will transition to SOFR. The loan is secured by the real property and certain other Security Interests. As guarantor, our liability under the loan has been reduced to 50% of the outstanding principal amount and will be further reduced to 25% of the outstanding principal amount upon reaching a certain debt service coverage ratio and the project maintaining 93% occupancy for ninety consecutive days. See Note 9. *Debt, Net* for additional information.

In 2021, a wholly-owned subsidiary of ours entered into a $21.2 million loan, which is guaranteed by us. As of June 30, 2023 and December 31, 2022, $17.1 million and $10.4 million, respectively, was outstanding on the Hotel Indigo Loan. The loan bears interest at a rate of SOFR plus 2.7%, with a floor of 2.7%, through October 2023 and SOFR plus 2.5%, with a floor of 2.5%, from November 2023 through maturity. The loan matures in October 2028 and includes an option for an extension of the maturity date by sixty months, subject to certain conditions. The loan is secured by the leasehold property and certain other Security Interests. See Note 9. *Debt, Net* for additional information.

In January 2022, the Mexico Beach Crossings JV entered into a $43.5 million loan, insured by HUD. As of June 30, 2023 and December 31, 2022, $38.1 million and $23.4 million, respectively, was outstanding on the Mexico Beach Crossings JV Loan. The loan bears interest at a rate of 3.0% and matures in March 2064. The loan may not be prepaid prior to April 2024 and if any additional principal is prepaid from April 2024 through March 2034 a premium is due to the lender of 1% - 10%. The loan is secured by the real property and certain other Security Interests. See Note 9. *Debt, Net* for additional information.

In July 2022, a wholly-owned subsidiary of ours entered into a $13.7 million loan, which is guaranteed by us. As of June 30, 2023 and December 31, 2022, $10.4 million and $5.2 million, respectively, was outstanding on the Topsail Hotel Loan. The loan bears interest at a rate of SOFR plus 2.1%, with a floor of 3.0% and matures in July 2027. The loan is secured by the real property and certain other Security Interests. See Note 9. *Debt, Net* for additional information.

In December 2022, a wholly-owned subsidiary of ours entered into a $37.0 million loan, which is guaranteed by us. As of June 30, 2023 and December 31, 2022, $36.3 million and $37.0 million, respectively, was outstanding on The Pearl Hotel Loan. The loan bears interest at a rate of 6.3% and matures in December 2032. The loan includes a prepayment fee due to the lender of 1% - 5% of the outstanding principal balance if the loan is refinanced with another financial institution through December 2027. The loan is secured by the real property and certain other Security Interests. See Note 9. *Debt, Net* for additional information.

CDD bonds financed the construction of infrastructure improvements in some of our communities. The principal and interest payments on the bonds are paid by assessments on the properties benefited by the improvements financed by the bonds. We have recorded a liability for CDD debt that is associated with platted property, which is the point at which it becomes fixed and determinable. Additionally, we have recorded a liability for the balance of the CDD debt that is associated with unplatted property if it is probable and reasonably estimable that we will ultimately be responsible for repayment. We have recorded CDD related debt of $3.3 million as of June 30, 2023. Total outstanding CDD debt related to our land holdings was $11.0 million as of June 30, 2023, which was comprised of $9.0 million at the SouthWood community, $1.9 million at the existing Pier Park retail center and less than $0.1 million at the Wild Heron community. We pay interest on this total outstanding CDD debt.

As of June 30, 2023, our unconsolidated Watersound Fountains Independent Living JV, Latitude Margaritaville Watersound JV, Pier Park TPS JV, Pier Park RI JV, Busy Bee JV and Electric Cart Watersound JV had various loans outstanding, some of which we have entered into guarantees. See Note 4. *Joint Ventures* and Note 18. *Commitments and Contingencies* for additional information.

In 2020, we, as lender, entered into a $10.0 million secured revolving promissory note with the unconsolidated Latitude Margaritaville Watersound JV, as borrower. As of both June 30, 2023 and December 31, 2022, there was no principal balance outstanding on the Latitude JV Note. The note was provided by us to finance the development of the pod-level, non-spine infrastructure. Future advances, if any, will be repaid by the JV as each home is sold by the JV, with the aggregate unpaid principal and all accrued and unpaid interest due at maturity in June 2025. The note is secured by a mortgage and security interest in and on the real property and improvements located on the real property of the JV. See 18. *Commitments and Contingencies* for additional information.

During the six months ended June 30, 2023, we did not repurchase shares of our common stock outstanding. During the six months ended June 30, 2022, we repurchased 4,760 shares of our common stock outstanding at an average purchase price of $37.83, per share, for an aggregate purchase price of $0.2 million. See Note 14. *Stockholders’ Equity* for additional information regarding the Stock Repurchase Program.

As part of a timberland sale in 2008, we have recorded a retained interest with respect to notes contributed to a bankruptcy-remote qualified SPE of $6.7 million for the installment notes monetized through June 30, 2023. This balance represents the present value of future cash flows to be received over the life of the installment notes, using management’s best estimates of underlying assumptions, including credit risk and interest rates as of the date of the monetization, plus the accretion of investment income based on an effective yield, which is recognized over the term of the notes, less actual cash receipts. During the second quarter of 2023, all parties agreed to an optional prepayment, in full, in August 2023, prior to the installment notes’ scheduled maturity in 2024. See Note 8. *Other Assets* for additional information.

As of June 30, 2023 and December 31, 2022, we were required to provide surety bonds that guarantee completion and maintenance of certain infrastructure in certain development projects and mitigation banks, as well as other financial guarantees of $34.7 million and $38.1 million, respectively, as well as standby letters of credit in the amount of $2.8 million and $17.3 million, respectively, which may potentially result in a liability to us if certain obligations are not met.

In conducting our operations, we routinely hold customers’ assets in escrow pending completion of real estate transactions, and are responsible for the proper disposition of these balances for our customers. These amounts are maintained in segregated bank accounts and have not been included in the accompanying condensed consolidated balance sheets, consistent with GAAP and industry practice. The cash deposit accounts and offsetting liability balances for escrow deposits in connection with our title insurance agencies for real estate transactions were $9.0 million and $8.0 million as of June 30, 2023 and December 31, 2022, respectively. These escrow funds are not available for regular operations.

### Summary of Cash Flows

A summary of our cash flows from operating, investing and financing activities are as follows:

*In millions*

| ​ ​ ​ ​ | ​ ​ ​ | ​ ​ Six Months Ended June 30, 2023 | ​ | ​ ​ 2022 | ​ ​ ​ |
| --- | --- | ---: | --- | ---: | --- |
| Net cash provided by operating activities | ​ | $52.9 | ​ | $29.0 | ​ |
| Net cash used in investing activities | ​ | (70.1) | ​ | (130.1) | ​ |
| Net cash provided by financing activities | ​ | 47.4 | ​ | 56.4 | ​ |
| Net increase (decrease) in cash, cash equivalents and restricted cash | ​ | 30.2 | ​ | (44.7) | ​ |
| Cash, cash equivalents and restricted cash at beginning of the period | ​ | 45.3 | ​ | 74.4 | ​ |
| **Cash, cash equivalents and restricted cash at end of the period** | **​** | **$75.5** | **​** | **$29.7** | **​** |

### Cash Flows from Operating Activities

Cash flows provided by operating activities includes net income, adjustments for non-cash items, changes in operating assets and liabilities and expenditures related to assets ultimately planned to be sold, including developed and undeveloped land. Adjustments for non-cash items primarily include depreciation, depletion and amortization, equity in income from unconsolidated joint ventures, net of distributions, deferred income tax expense and cost of real estate sold. Net cash provided by operations was $52.9 million during the six months ended June 30, 2023, as compared to $29.0 million during the same period in 2022. The increase in net cash provided by operating activities was primarily due to the changes in net income, cost of real estate sold and deferred income tax expense, partially offset by the changes in equity in income from unconsolidated joint ventures, net of distributions and other assets during the period.

### Cash Flows from Investing Activities

Cash flows used in investing activities primarily includes capital expenditures for operating property and property and equipment used in our operations, purchases of investments and capital contributions to unconsolidated joint ventures, partially offset by proceeds from insurance claims, maturities of investments, capital distributions from unconsolidated joint ventures and maturities of assets held by SPEs. During the six months ended June 30, 2023, net cash used in investing activities was $70.1 million, which included capital expenditures for operating property and equipment, purchases of investments of U.S. Treasury Bills of $27.5 million and capital contributions to unconsolidated joint ventures of $1.9 million, partially offset by maturities of investments of $41.0 million, capital distributions from unconsolidated joint ventures of $0.2 million and maturities of assets held by SPEs of $0.4 million. During the six months ended June 30, 2022, net cash used in investing activities was $130.1 million, which included capital expenditures for operating property and equipment, purchases of investments of U.S. Treasury Bills of $94.2 million and capital contributions to unconsolidated joint ventures of $0.1 million, partially offset by proceeds from insurance claims of $3.3 million, maturities of investments of $69.0 million, capital distributions from unconsolidated joint ventures of $0.6 million and maturities of assets held by SPEs of $0.4 million.

Capital expenditures for operating property and property and equipment were $82.3 million and $109.1 million, during the six months ended June 30, 2023 and 2022, respectively, which were primarily for our commercial and hospitality segments.

### Cash Flows from Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2023 was $47.4 million, compared to $56.4 million during the same period in 2022. Net cash provided by financing activities during the six months ended June 30, 2023 included capital contribution from non-controlling interest of $0.8 million and borrowings on debt of $109.3 million, partially offset by capital distributions to non-controlling interest of $2.1 million, dividends paid of $11.7 million, principal payments for debt of $47.9 million, principal payments for finance leases of less than $0.1 million and debt issuance costs of $0.9 million. Net cash provided by financing activities during the six months ended June 30, 2022 included capital contribution from non-controlling interest of $2.0 million and borrowings on debt of $88.8 million, partially offset by capital distributions to non-controlling interest of $1.8 million, repurchase of common shares of $0.2 million, dividends paid of $11.8 million, principal payments for debt of $18.8 million, debt issuance costs of $1.7 million and principal payments for finance leases of $0.1million.

### Contractual Obligations

There were no material changes outside the ordinary course of our business in our contractual obligations during the second quarter of 2023.

### Forward-Looking Statements

This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements include, among other things, information about possible or assumed future results of the business and our financial condition, liquidity, results of operations, plans, strategies, prospects and objectives. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar expressions concerning matters that are not historical facts.

We caution you that all forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. Actual results or events may differ materially from those indicated as a result of various important factors, including: our ability to successfully implement our strategic objectives; new or increased competition across our business units; any decline in general economic conditions, particularly in our primary markets; interest rate fluctuations; supply chain disruptions; inflation; financial institution disruptions; geopolitical conflicts and political uncertainty and the corresponding impact on the global economy; our ability to successfully execute or integrate new business endeavors and acquisitions; our ability to yield anticipated returns from our developments and projects; our ability to effectively manage our real estate assets, as well as the ability for us or our joint venture partners to effectively manage the day-to-day activities of our joint venture projects; our ability to complete construction and development projects within expected timeframes; the illiquidity of all real estate assets; financial risks, including risks relating to currency fluctuations, credit risks, and fluctuations in the market value of our investment portfolio; any potential negative impact of our longer-term property development strategy, including losses and negative cash flows for an extended period of time if we continue with the self-development of granted entitlements; our dependence on homebuilders; mix of sales from different communities and the corresponding impact on sales period over period; reductions in travel and other risks inherent to the hospitality industry; the financial condition of our commercial tenants; regulatory and insurance risks associated with our senior living facilities; public health emergencies; any reduction in the supply of mortgage loans or tightening of credit markets; our dependence on strong migration and population expansion in our regions of development, particularly Northwest Florida; our ability to fully recover from natural disasters and severe weather conditions; the actual or perceived threat of climate change; the seasonality of our business; our ability to obtain adequate insurance for our properties or rising insurance costs; our dependence on certain third party providers; the inability of minority shareholders to influence corporate matters, due to concentrated ownership of largest shareholder; the impact of unfavorable legal proceedings or government investigations; the impact of complex and changing laws and regulations in the areas we operate; changes in tax rates, the adoption of new U.S. tax legislation, and exposure to additional tax liabilities, including with respect to Qualified Opportunity Zone program; new litigation; our ability to attract and retain qualified employees, particularly in our hospitality business; our ability to protect our information technology infrastructure and defend against cyber-attacks; increased media, political, and regulatory scrutiny could negatively impact our reputation; our ability to maintain adequate internal controls; risks associated with our financing arrangements, including our compliance with certain restrictions and limitations; our ability to pay our quarterly dividend; the potential volatility of our common stock; and the other risks and uncertainties discussed in “Risk Factors” beginning on page 6 of our most recent annual report on Form 10-K and from time to time in our subsequent filings with the SEC. We assume no obligation to revise or publicly released any revision to any forward-looking statements contained in this quarterly report on Form 10-Q unless required by law.

## Market risk

As filed, 1,976 characters.

We are exposed to market risks primarily from interest rate risk fluctuations. We have investments in U.S. Treasury Bills that have fixed interest rates for which changes in interest rates generally affect the fair value of the investment, but not the earnings or cash flows. A hypothetical 100 basis point increase in interest rates would result in a decrease of $0.1 million in the market value of these investments as of June 30, 2023. Any realized gain or loss resulting from such interest rate changes would only occur if we sold the investments prior to maturity or if a decline in their value is determined to be related to credit loss.

We have exposure to credit risk associated with our Securities and these instruments are subject to price fluctuations as a result of changes in the financial market’s assessment of issuer credit quality, increases in delinquency and default rates, changes in prevailing interest rates and other economic factors. A downgrade of the U.S. government’s credit rating may also decrease the value of our Securities. As of June 30, 2023, all of our Securities were rated AA or better.

Our cash and cash equivalents are invested in money market instruments. Changes in interest rates related to these investments would not significantly impact our results of operations. The amount of interest earned on our retained interest investments is based on LIBOR. A 100-basis point change in the interest rate may result in an insignificant change in interest earned on the investment.

The amount of interest expense on some of our project financing is based on LIBOR and SOFR. Based on the outstanding balance of these loans as of June 30, 2023, a hypothetical 100 basis point increase in the applicable rate would result in an increase to our annual interest expense of $1.5 million.

Effective July 1, 2023, the remainder of our debt agreements that reference a benchmark interest rate based on LIBOR will automatically transition to SOFR.

## Controls and procedures

As filed, 822 characters.

*Evaluation of Disclosure Controls and Procedures*. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and

15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

*Changes in Internal Control Over Financial Reporting*. During the quarter ended June 30, 2023, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

## Risk factors

As filed, 264 characters.

A description of the risk factors associated with our business is contained in the “Risk Factors” section of our annual report on Form 10-K for the fiscal year ended December 31, 2022. There have been no material changes to our Risk Factors as previously reported.

Filed Jul 26, 2023.
Source: SEC EDGAR, the filing index for accession 0001558370-23-012297. Last ingested by Listed: Nov 2, 2026, 16:19 ET. No prices; not investment advice.