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Year Ended December 31,

STATEMENT OF OPERATIONS:

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Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2019	Feb. 24, 2020	Jun. 30, 2019
Document and Entity Information [Abstract]
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Entity Registrant Name	ST JOE CO
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 349.7
Entity Common Stock, Shares Outstanding		59,414,583
Entity Central Index Key	0000745308
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
ASSETS
Investment in real estate, net	$ 430,776	$ 350,994
Investment in unconsolidated joint ventures	5,084	1,105
Cash and cash equivalents	185,716	195,155
Investments - debt securities	53	8,958
Investments - equity securities	9,746	36,132
Other assets	52,069	59,203
Property and equipment, net of accumulated depreciation of $63,223 and $60,271 at December 31, 2019 and December 31, 2018, respectively	19,018	12,031
Investments held by special purpose entities	206,771	207,384
Total assets	909,233	870,962
Liabilities:
Debt, net	92,529	69,374
Other liabilities	57,200	47,387
Deferred tax liabilities, net	52,808	44,315
Senior Notes held by special purpose entity	177,026	176,775
Total liabilities	379,563	337,851
Commitments and contingencies (Note 22)
Equity:
Common stock, no par value; 180,000,000 shares authorized; 59,414,583 and 60,672,034 issued and outstanding at December 31, 2019 and December 31, 2018, respectively	305,631	331,395
Retained earnings	214,225	187,450
Accumulated other comprehensive loss	(335)	(674)
Total stockholders' equity	519,521	518,171
Non-controlling interest	10,149	14,940
Total equity	529,670	533,111
Total liabilities and equity	$ 909,233	$ 870,962

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
CONDENSED CONSOLIDATED BALANCE SHEETS
Property and equipment, Accumulated depreciation	$ 63,223	$ 60,271
Common stock, par value	$ 0	$ 0
Common stock, shares authorized (in shares)	180,000,000	180,000,000
Common stock, issued (in shares)	59,414,583	60,672,034
Common stock, outstanding (in shares)	59,414,583	60,672,034

CONDENSED CONSOLIDATED BALANCE SHEETS - VIEs - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
ASSETS
Investment in real estate	$ 430,776	$ 350,994
Cash and cash equivalents	185,716	195,155
Other assets	52,069	59,203
Investments held by special purpose entities	206,771	207,384
Total assets	909,233	870,962
LIABILITIES
Debt, net	92,529	69,374
Other liabilities	57,200	47,387
Senior Notes held by special purpose entity	177,026	176,775
Total liabilities	379,563	337,851
Variable Interest Entities
ASSETS
Investment in real estate	96,001	70,124
Cash and cash equivalents	3,483	2,113
Other assets	12,766	16,165
Investments held by special purpose entities	206,771	207,384
Total assets	319,021	295,786
LIABILITIES
Debt, net	81,071	60,262
Other liabilities	3,471	5,773
Senior Notes held by special purpose entity	177,026	176,775
Total liabilities	$ 261,568	$ 242,810

CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue:
Leasing revenue	$ 15,581
Leasing revenue		$ 13,727	$ 12,940
Total revenue	127,085	110,276	100,038
Expenses:
Cost of leasing revenue	4,650	4,700	4,548
Other operating and corporate expenses	21,389	20,557	20,382
Depreciation, depletion and amortization	10,287	8,998	8,885
Total expenses	95,762	80,872	96,461
Operating income	31,323	29,404	3,577
Other income (expense):
Investment income, net	10,714	12,150	35,410
Interest expense	(12,302)	(11,840)	(12,145)
Sale of vacation rental management, net			9,800
Other income, net	6,450	1,152	4,713
Total other income, net	4,862	1,462	37,778
Income before equity in loss from unconsolidated affiliates and income taxes	36,185	30,866	41,355
Equity in loss from unconsolidated affiliates	(77)
Income tax (expense) benefit	(9,447)	736	17,881
Net income	26,661	31,602	59,236
Net loss attributable to non-controlling interest	114	767	342
Net income attributable to the Company	$ 26,775	$ 32,369	$ 59,578
Basic and Diluted
Weighted average shares outstanding (in shares)	59,994,527	62,725,954	70,548,411
Net income per share attributable to the Company (in dollars per share)	$ 0.45	$ 0.52	$ 0.84
Real estate
Revenue:
Revenue	$ 61,488	$ 52,183	$ 27,717
Expenses:
Cost of revenue	24,282	13,442	15,370
Hospitality
Revenue:
Revenue	46,112	38,736	53,217
Expenses:
Cost of revenue	34,505	32,465	46,467
Timber
Revenue:
Revenue	3,904	5,630	6,164
Expenses:
Cost of revenue	$ 649	$ 710	$ 809

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Net income:

$ 26,661

$ 31,602

$ 59,236

Other comprehensive income (loss):

Interest rate swap

(336)

Reclassification of net realized (gain) loss included in earnings

(69)

1,061

(10,750)

Reclassification into retained earnings

^[1]

932

Reclassification of other-than-temporary impairment loss included in earnings

2,330

2,288

Total before income taxes

455

1,472

(6,456)

Income (expense) tax benefit

^[2]

(116)

(685)

2,488

Total other comprehensive (loss) income, net of tax

339

787

(3,968)

Total comprehensive income, net of tax

27,000

32,389

55,268

Unrestricted available-for-sale, Debt securities

Other comprehensive income (loss):

Net unrealized gain (loss) on investments

842

(2,845)

Unrestricted available-for-sale, Debt and equity securities

Other comprehensive income (loss):

Net unrealized gain (loss) on investments

2,015

Restricted

Other comprehensive income (loss):

Net unrealized gain (loss) on investments

$ 18

$ (6)

$ (9)

[1]

The reclassification into retained earnings for the year ended December 31, 2018 relates to the adoption of ASU 2016-01 Financial Instruments - Overall, as amended (“ASU 2016-01”). The new guidance was effective January 1, 2018, and required equity investments to be measured at fair value with changes in fair value recognized in results of operations rather than the consolidated statements of comprehensive income.

[2]

Income tax expense for the year ended December 31, 2018 includes $0.3 million of income tax expense related to the adoption of ASU 2018-02 Income Statement - Reporting Comprehensive Income (“ASU 2018-02”). The new guidance was effective January 1, 2018, and allowed a reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects resulting from the Tax Act.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical)
$ in Thousands

12 Months Ended

Dec. 31, 2018

USD ($)

Income (expense) tax benefit

$ (685)

^[1]

Scenario, Adjustment | ASU 2018-02

Income (expense) tax benefit

$ (300)

[1]

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Retained Earnings	Accumulated Other Comprehensive (Loss) Income	Treasury Stock	Non-controlling Interest	Total
Beginning Balance (in shares) at Dec. 31, 2016	74,342,826
Beginning Balance at Dec. 31, 2016	$ 572,040	$ 94,746	$ 2,507		$ 17,506	$ 686,799
Increase (Decrease) in Stockholders' Equity
Capital contribution from non-controlling interest					193	193
Capital distribution to non-controlling interest					(2,330)	(2,330)
Stock based compensation expense	$ 76					76
Stock based compensation expense (in shares)	5,334
Repurchase of common shares				$ (147,422)		(147,422)
Repurchase of common shares (in shares)	(8,450,294)
Retirement of treasury stock	$ (147,422)			147,422
Other comprehensive income (loss)			(3,968)			(3,968)
Net income		59,578			(342)	59,236
Ending Balance at Dec. 31, 2017	$ 424,694	154,324	(1,461)		15,027	592,584
Ending Balance (in shares) at Dec. 31, 2017	65,897,866
Increase (Decrease) in Stockholders' Equity
Allocation of ownership interest	$ (490)				490
Additional ownership interest	297				(297)
Capital contribution from non-controlling interest					887	887
Capital distribution to non-controlling interest					(400)	(400)
Stock based compensation expense	$ 71					71
Stock based compensation expense (in shares)	2,778
Issuance of common stock for officer compensation, net of tax withholding	$ 192					192
Issuance of common stock for officer compensation, net of tax withholding (in shares)	9,956
Repurchase of common shares				(93,369)		(93,369)
Repurchase of common shares (in shares)	(5,238,566)
Retirement of treasury stock	$ (93,369)			93,369
Adoption of ASU 2018-02 Income Statement - Reporting Comprehensive Income		313	(313)
Other comprehensive income (loss)			787			787
Other comprehensive (loss) income, net of tax, excluding adoption of ASUs			404			404
Net income		32,369			(767)	31,602
Ending Balance at Dec. 31, 2018	$ 331,395	187,450	(674)		14,940	$ 533,111
Ending Balance (in shares) at Dec. 31, 2018	60,672,034					60,672,034
Increase (Decrease) in Stockholders' Equity
Adoption of ASU, net of tax \| ASU 2014-09		1,140				$ 1,140
Adoption of ASU, net of tax \| ASU 2016-01		(696)	696
Allocation of ownership interest	$ (1,209)				1,209
Additional ownership interest	(3,787)				(7,832)	(11,619)
Capital contribution from non-controlling interest					2,546	2,546
Capital distribution to non-controlling interest					(600)	(600)
Stock based compensation expense	$ 77					77
Stock based compensation expense (in shares)	5,708
Repurchase of common shares				(20,845)		(20,845)
Repurchase of common shares (in shares)	(1,263,159)
Retirement of treasury stock	$ (20,845)			$ 20,845
Other comprehensive income (loss)			339			339
Net income		26,775			(114)	26,661
Ending Balance at Dec. 31, 2019	$ 305,631	$ 214,225	$ (335)		$ 10,149	$ 529,670
Ending Balance (in shares) at Dec. 31, 2019	59,414,583					59,414,583

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net income	$ 26,661	$ 31,602	$ 59,236
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	10,287	8,998	8,885
Stock based compensation	77	263	76
(Gain) loss on sale of investments	(87)	973	(10,750)
Unrealized loss on investments, net	5,342	3,035
Other-than-temporary impairment loss		2,330
Other-than-temporary impairment loss			2,288
Equity in loss from unconsolidated affiliates	77
Deferred income tax expense (benefit)	8,378	(4,804)	(17,375)
Impairment loss on investment in real estate		99	714
Gain on sale of vacation rental management			(9,800)
Cost of real estate sold	22,814	12,235	13,727
Expenditures for and acquisition of real estate to be sold	(40,081)	(19,819)	(8,475)
Accretion income and other	(1,221)	(1,919)	(3,159)
Proceeds from insurance claim - business interruption	1,307
(Gain) loss on disposal of property and equipment	(67)	5,223	887
Gain on land contribution to equity method investment	(2,317)
Gain on insurance for damage to property and equipment, net	(5,347)
Changes in operating assets and liabilities:
Other assets	(229)	(17)	(5,582)
Other liabilities	3,728	(1,236)	4,734
Income taxes receivable	1,071	4,457	18,300
Net cash provided by operating activities	30,393	41,420	53,706
Cash flows from investing activities:
Expenditures for operating property	(64,851)	(22,762)	(28,400)
Expenditures for property and equipment	(9,354)	(2,615)	(3,005)
Proceeds from the disposition of assets	72	5,000	2,518
Proceeds from insurance claims	12,071
Purchases of investments - debt securities		(6,917)	(94,791)
Purchases of investments - equity securities	(5,797)	(15,105)	(21,153)
Purchases of restricted investments	(74)	(78)	(75)
Maturities of investments - debt securities	7,000	10,000	13,988
Sales of investments - debt securities	2,830	63,597	151,752
Sales of investments - equity securities	26,859	11,051	21,522
Sales of restricted investments	1,159	1,109	1,233
Maturities of assets held by special purpose entities	787	785	787
Net cash (used in) provided by investing activities	(29,298)	44,065	44,376
Cash flows from financing activities:
Capital contribution from non-controlling interest	2,546	887	193
Capital distribution to non-controlling interest	(600)	(400)	(2,330)
Capital contribution to unconsolidated affiliate	(1,116)	(1,105)
Additional ownership interest in Windmark	(11,619)
Repurchase of common shares	(20,845)	(93,369)	(147,422)
Borrowings on debt	23,935	16,644	1,624
Principal payments for debt	(1,607)	(1,362)	(1,290)
Principal payments under finance lease obligation	(36)
Debt issuance costs	(1,149)	(1,158)	(20)
Net cash used in financing activities	(10,491)	(79,863)	(149,245)
Net (decrease) increase in cash, cash equivalents and restricted cash	(9,396)	5,622	(51,163)
Cash, cash equivalents and restricted cash at beginning of the year	198,073	192,451	243,614
Cash, cash equivalents and restricted cash at end of the year	$ 188,677	$ 198,073	$ 192,451

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash, cash equivalents and restricted cash:
Cash and cash equivalents	$ 185,716	$ 195,155	$ 192,083
Restricted cash included in other assets	2,961	2,918	368
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	188,677	198,073	192,451
Cash paid during the period for:
Interest, net of amounts capitalized	11,886	11,617	11,817
Income taxes		2,005	5,430
Non-cash financing and investment activities:
Increase in notes receivable - PCR Note			(5,000)
Non-cash allocation of ownership interest in JV	1,209	490
Non-cash contribution to equity method investment	(2,940)
Increase (decrease) in Community Development District debt	1,203	(467)	174
Increase (decrease) in expenditures for operating properties and property and equipment financed through accounts payable	$ 3,158	$ (1,273)	$ 2,525

Nature of Operations	12 Months Ended
Nature of Operations	Dec. 31, 2019
Nature of Operations
Nature of Operations	1. Nature of Operations The St. Joe Company, together with its consolidated subsidiaries, (“St. Joe” or the “Company”) is a Florida real estate development, asset management and operating company with real estate assets and operations in Northwest Florida. Approximately 90% of the Company’s real estate land holdings are located within fifteen miles of the Gulf of Mexico. The Company conducts primarily all of its business in the following four reportable operating segments: 1) residential real estate, 2) hospitality, 3) commercial leasing and sales and 4) forestry. Commencing in the fourth quarter of 2018, the Company’s previously titled “resorts and leisure” segment was retitled “hospitality,” with no effect on the consolidated balance sheets, statements of income, statements of comprehensive income or statements of cash flows for the periods presented.

Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Significant Accounting Policies

Significant Accounting Policies

2. Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The consolidated financial statements include the accounts of the Company and all of its majority-owned and controlled subsidiaries and variable interest entities where the Company deems itself the primary beneficiary. Investments in JVs and limited partnerships in which the Company is not the primary beneficiary are accounted for by the equity method. All significant intercompany transactions and balances have been eliminated in consolidation. Certain prior year amounts in the accompanying consolidated financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on the Company’s previously reported total assets and liabilities, stockholders’ equity or net income.

A variable interest entity (“VIE”) is an entity in which a controlling financial interest may be achieved through arrangements that do not involve voting interests. A VIE is required to be consolidated by its primary beneficiary, which is the entity that possesses the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to the entity. The Company consolidates VIEs when it is the primary beneficiary of the VIE, including real estate JVs determined to be VIEs. The Company continues to assess whether it is the primary beneficiary on an ongoing basis. See Note 4. Real Estate Joint Ventures.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions including investment in real estate, real estate impairment assessments, investments, other-than-temporary impairment assessments, retained interest investments, accruals and deferred income taxes. Actual results could differ from those estimates.

Investment in Real Estate

The Company capitalizes costs directly associated with development and construction of identified real estate projects. The Company also capitalizes those indirect costs that relate to the projects under development or construction. These indirect costs include construction and development administration, legal fees, capitalized interest, and project administration to the extent that such costs are related to a specific project. Interest is capitalized (up to total interest expense) based on the amount of underlying borrowings and real estate taxes are capitalized on real estate projects under development.

Real estate development costs also include land and common development costs (such as roads, utilities and amenities), capitalized property taxes, capitalized interest and certain indirect costs. A portion of real estate development costs and estimates for costs to complete are allocated to each unit based on the relative sales value of each unit as compared to the estimated sales value of the total project. These estimates are reevaluated at least annually and more frequently if warranted by market conditions, changes in the project’s scope or other factors, with any adjustments being allocated prospectively to the remaining property or units.

The capitalization period relating to direct and indirect project costs is the period in which activities necessary to ready a property for its intended use are in progress. The period begins when such activities commence, typically when the Company begins site work for land already owned, and ends when the asset is substantially complete and ready for its intended use. Determination of when construction of a project is substantially complete and ready for its intended use requires judgment. The Company determines when the capitalization period begins and ends through communication with project and other managers responsible for the tracking and oversight of individual projects. In the event that the activities to ready the asset for its intended use are suspended, the capitalization period will cease until such activities are resumed. If the Company determines a project will not be completed, any previously capitalized costs are expensed in the period in which the determination is made and recovery is not deemed probable.

Investment in real estate is carried at cost, net of depreciation and timber depletion, unless circumstances indicate that the carrying value of the assets may not be recoverable. If the Company determines that an impairment exists due to the inability to recover an asset’s carrying value, an impairment charge is recorded to the extent that the carrying value exceeds estimated fair value. If such assets were held for sale, the provision for loss would be recorded to the extent that the carrying value exceeds estimated fair value less costs to sell.

Depreciation for operating property is computed on the straight-line method over the estimated economic lives of the assets, as follows:


		Estimated Useful
		Life (in years)
Land		N/A
Land improvements		15 - 20
Buildings		20-40
Building improvements		5-25
Timber		N/A

Building improvements are amortized on a straight-line basis over the shorter of the minimum lease term or the estimated economic life of the assets.

Long-Lived Assets

Long-lived assets include the Company’s investments in operating and development property and property and equipment. The Company reviews its long-lived assets for impairment quarterly to determine whether events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. As part of the Company’s review for impairment of its long-lived assets, the Company reviews the long-lived asset’s carrying value, current period actual financial results as compared to prior period and forecasted results contained in the Company’s business plan and any other events or changes in circumstances to identify whether an indicator of potential impairment may exist. Some of the events or changes in circumstances that are considered by the Company as indicators of potential impairment include:

a prolonged decrease in the fair value or demand for the Company’s properties;

a change in the expected use or development plans for the Company’s properties;

a material change in strategy that would affect the fair value of the Company’s properties;

continuing operating or cash flow loss for an operating property;

an accumulation of costs in excess of the projected costs for development or operating property; and

any other adverse change that may affect the fair value of the property.

The Company uses varying methods to determine if an impairment exists, such as (i) considering indicators of potential impairment, (ii) analyzing expected future cash flows and comparing the expected future undiscounted cash flows of the property to its carrying value or (iii) determining market resale values.

For projects under development, an estimate of undiscounted future cash flows is performed using estimated future expenditures necessary to develop and maintain the existing project and using management’s best estimates about future sales prices and holding periods. The projection of undiscounted cash flows requires that management develop various assumptions including:

the projected pace of sales of homesites based on estimated market conditions and the Company’s development plans;

estimated pricing and projected price appreciation over time;

the amount and trajectory of price appreciation over the estimated selling period;

the length of the estimated development and selling periods, which can differ depending on the size of the development and the number of phases to be developed;

the amount of remaining development costs, including the extent of infrastructure or amenities included in such development costs;

holding costs to be incurred over the selling period;

for bulk land sales of undeveloped and developed parcels future pricing is based upon estimated developed homesite pricing less estimated development costs and estimated developer profit;

for commercial and multi-family development property, future pricing is based on sales of comparable property in similar markets; and

whether liquidity is available to fund continued development.

For operating properties, an estimate of undiscounted cash flows also requires management to make assumptions about the use and disposition of such properties. These assumptions include:

for investments in hotels, other rental units and vacation rental homes, average occupancy and room rates, revenue from food and beverage and other amenity operations, operating expenses and capital expenditures, and eventual disposition of such properties as private residence vacation units or condominiums, based on current prices for similar units appreciated to the expected sale date;

for investments in commercial, multi-family or retail property, future occupancy and rental rates and the amount of proceeds to be realized upon eventual disposition of such property at a terminal capitalization rate; and,

for investments in club assets, retail, membership dues, future rounds and greens fees and other hospitality assets, operating expenses and capital expenditures, and the amount of proceeds to be realized upon eventual disposition of such properties at a multiple of terminal year cash flows.

Homesites substantially completed and ready for sale are measured at the lower of carrying value or fair value less costs to sell. Management identifies homesites as being substantially completed and ready for sale when the properties are being actively marketed with intent to sell such properties in the near term and under current market conditions. Other homesites, which management does not intend to sell in the near term under current market conditions, are evaluated for impairment based on management’s best estimate of the long-term use and eventual disposition of such property.

Other properties that management does not intend to sell in the near term under current market conditions and has the ability to hold are evaluated for impairment based on management’s best estimate of the long-term use and eventual disposition of the property. The results of impairment analyses for development and operating properties are particularly dependent on the estimated holding and selling period for each asset group.

If a property is considered impaired, the impairment charge is determined by the amount the property’s carrying value exceeds its fair value. The Company uses varying methods to determine fair value, such as (i) analyzing expected future cash flows, (ii) determining resale values in a given market (iii) applying a capitalization rate to net operating income using prevailing rates in a given market or (iv) applying a multiplier to revenue using prevailing rates in a given market. The fair value of a property may be derived either from discounting projected cash flows at an appropriate discount rate, through appraisals of the underlying property, or a combination thereof.

The Company classifies the assets and liabilities of a long-lived asset as held-for-sale when management approves and commits to a formal plan of sale and it is probable that a sale will be completed. The carrying value of the assets held-for-sale are then recorded at the lower of their carrying value or fair value less estimated costs to sell.

Timber Inventory

The Company estimates its standing timber inventory on an annual basis utilizing a process referred to as a “timber cruise.” Specifically, the Company conducts field measurements of the number of trees, tree height and tree diameter on a sample area equal to approximately 20% of the Company’s timber holdings each year. Inventory data is used to calculate volumes and products along with growth projections to maintain accurate data. Industry practices are used for modeling, including growth projections, volume and product classifications. A depletion rate is established annually by dividing merchantable inventory cost by standing merchantable inventory volume.

Investment in Unconsolidated Joint Ventures

The Company has entered into real estate JVs in which the Company is not the primary beneficiary and the Company’s investment in these JVs are accounted for by the equity method. The Company evaluates its investment in unconsolidated JVs for impairment during each reporting period. A series of operating losses of an investee or other factors may indicate that a decrease in the value of the Company’s investment in the unconsolidated JV has occurred that is other-than-temporary. The amount of impairment recognized is the excess of the investment’s carrying value over its estimated fair value. Some of the Company’s unconsolidated JVs have entered into financing agreements, where the Company or its JV partners have provided guarantees. See Note 4. Real Estate Joint Ventures and Note 22. Commitments and Contingencies for additional information.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, bank demand accounts, money market instruments, investment grade commercial paper and U.S. Treasury Bills having original maturities at acquisition date, of ninety days or less.

Investments

Investments – debt securities and restricted investments consist of available-for-sale securities recorded at fair value, which is established through external pricing services that use quoted market prices and pricing data from recently executed market transactions. Unrealized gains and temporary losses on investments, net of tax, are recorded in other comprehensive income (loss). Realized gains and losses on investments are determined using the specific identification method. The amortized cost of debt securities are adjusted for amortization of premiums and accretion of discounts to maturity computed under the effective interest method. Such amortization and accretion is included in investment income, net.

The Company evaluates investments classified as available-for-sale with an unrealized loss to determine if they are other-than-temporarily impaired. This evaluation is based on various factors, including the financial condition, business prospects, industry and creditworthiness of the issuer, severity and length of time the securities were in a loss position, the Company’s ability and intent to hold investments until the unrealized loss is recovered or until maturity and the amount of the unrealized loss. If a decline in fair value is considered other-than-temporary, the decline is then bifurcated into its credit and non-credit related components. The amount of the credit-related component is recognized in earnings, and the amount of the non-credit related component is recognized in other comprehensive income (loss), unless the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security prior to its anticipated recovery, in which case the decline in fair value is recognized entirely in earnings.

Beginning on January 1, 2018, investments - equity securities with a readily determinable fair value are recorded at fair value, which is established through external pricing services that use quoted market prices and pricing data from recently executed market transactions. Unrealized holding gains and losses are recognized in investment income, net in the consolidated statements of income. Prior to 2018, unrealized gains and losses related to these investments were recognized in other comprehensive income (loss).

Fair Value Measurements

Fair value is an exit price, representing the amount that would be received by selling an asset or paying to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1. Quoted prices in active markets for identical assets or liabilities;

Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3. Unobservable inputs in which there is little or no market data, such as internally-developed valuation models, which require the reporting entity to develop its own assumptions.

Comprehensive Income

The Company’s comprehensive income includes unrealized gains and losses on available-for-sale securities and restricted investments, which may be temporary, and fair value adjustments for cash flow hedges.

Receivables

The Company’s receivables primarily include receivables related to certain homesite sales, homebuilder notes, leasing receivables, membership initiation fees, hospitality receivables and other receivables. The Company evaluates the carrying value of receivables at each reporting date. Receivable balances are adjusted to net realizable value based upon a review of entity specific facts or when terms are modified. Judgments are made with respect to the collectability of accounts based on historical experience and current economic trends. Actual losses could differ from those estimates. As of December 31, 2019 and 2018, allowance for doubtful accounts receivable was $0.3 million and $0.2 million, respectively.

Property and Equipment, net

Property and equipment is stated at cost, net of accumulated depreciation. Major improvements are capitalized while maintenance and repairs are expensed in the period the cost is incurred. Depreciation is computed using the straight-line method over the estimated economic lives of various assets, as follows:


		Estimated Useful
		Life (in years)
Railroad and equipment		15-30
Furniture and fixtures		5-10
Machinery and equipment		3-10
Office equipment		5-10
Autos, trucks and aircraft		5 -10

Income Taxes

The Company’s provision for income taxes includes the current tax owed on the current period earnings, as well as a deferred provision, which reflects the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Changes in existing tax laws and rates, their related interpretations, as well as the uncertainty generated by the prospect of tax legislation in the future may affect the amounts of deferred tax liabilities or the realizability of deferred tax assets.

For tax positions the Company has taken or expects to take in a tax return, the Company applies a more likely than not assessment (i.e., there is a greater than 50 percent chance) about whether the tax position will be sustained upon examination by the appropriate tax authority with full knowledge of all relevant information. Amounts recorded for uncertain tax positions are periodically assessed, including the evaluation of new facts and circumstances, to ensure sustainability of the position. The Company records interest related to unrecognized tax benefits, if any, in interest expense and penalties in other income, net. The Company applies the aggregate portfolio method to account for income tax effects in accumulated other comprehensive loss with respect to available-for-sale debt securities.

Concentration of Risks and Uncertainties

The Company’s real estate investments are concentrated in Northwest Florida. Uncertain economic conditions could have an adverse impact on the Company’s real estate values.

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, investments, other receivables, investments held by special purpose entity or entities (“SPE”), and investments in retained interests. The Company deposits and invests cash with local and regional financial institutions and as of December 31, 2019 these balances exceed the amount of FDIC insurance provided on such deposits by $22.4 million. In addition, as of December 31, 2019, the Company had $0.1 million invested in one issuer of corporate debt securities that is non-investment grade, $9.7 million invested in four issuers of preferred stock that are non-investment grade and one issuer of preferred stock that is investment grade, as well as investments of $138.2 million in short term commercial paper from twenty issuers and short term U.S. Treasury Bills of $7.0 million.

Earnings Per Share

Basic and diluted earnings per share are calculated by dividing net income attributable to the Company by the average number of common shares outstanding for the period. For the three years ended December 31, 2019, basic and diluted average shares outstanding were the same. There were no outstanding common stock equivalents as of December 31, 2019 or 2018. Non-vested restricted stock is included in outstanding shares at the time of grant.

Revenue and Revenue Recognition

Revenue consists primarily of real estate sales, hospitality operations, leasing operations, and timber sales. Taxes collected from customers and remitted to governmental authorities (e.g., sales tax) are excluded from revenue, costs and expenses.

In accordance with Topic 606, revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services by applying the following steps; (1) identifying the contract(s) with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when (or as) the Company satisfies a performance obligation. The adoption of Topic 606 as of January 1, 2018 impacted the Company’s residential real estate segment as detailed below and had a de minimis impact on the hospitality segment, but did not impact the commercial leasing and sales or forestry segments. Lease related revenue is excluded from Topic 606. The following summary details the Company’s revenue and the related timing of revenue recognition by segment.

Real Estate Revenue

Revenue from real estate sales, including homesites, commercial properties, operating properties and rural or timberland, is recognized at the point in time when a sale is closed and title and control has been transferred to the buyer. If a performance obligation is not yet complete when title transfers to the buyer, the revenue associated with the incomplete performance obligation is deferred until completed.

Residential real estate revenue includes the sale of developed homesites; the sale of parcels of entitled, undeveloped land; a homesite residual on homebuilder sales that provides the Company a percentage of the sale price of the completed home if the home price exceeds a negotiated threshold; the sale of tap and impact fee credits; marketing fees and other fees on certain transactions.

Effective January 1, 2018, with the adoption of Topic 606, estimated homesite residuals and certain estimated fees are recognized as revenue at the point in time of sale to homebuilders, subject to constraints, and any change in material circumstances from the estimated amounts are updated at each reporting period. The variable consideration for homesite residuals and certain estimated fees are based on historical experience and are recognized as revenue when it can be reasonably estimated and only to the extent it is probable that a significant reversal in the estimated amount of cumulative revenue will not occur when uncertainties are resolved. For the years ended December 31, 2019 and 2018, real estate revenue includes $2.5 million and $1.0 million, respectively of estimated homesite residuals and $2.3 million and $1.1 million, respectively of certain estimated fees related to homebuilder homesite sales. Prior to 2018, these homesite residuals and fees were recognized in revenue when consideration was received by the Company in periods subsequent to the initial recognition of revenue for the sale of the homesite.

Hospitality Revenue

The Company’s hospitality segment generates revenue from membership sales, membership reservations, golf courses, the WaterColor Inn and WaterSound Inn, short-term vacation rentals, management of The Pearl Hotel, food and beverage operations, merchandise sales, marina operations, 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 membership initiation fees and management fees.

Clubs – Club operations include the Company’s golf courses, beach club and facilities that generate revenue from membership sales, membership reservations, daily play at the golf courses, merchandise sales and food and beverage sales. Daily play at the golf courses, merchandise sales and food and beverages sales are recognized at the point of sale. Club membership revenue consists of monthly dues, which are recognized monthly at the point in time as access is provided for the period, membership reservations that are recognized at the point in time when certain performance obligations are met and non-refundable initiation fees that are deferred and recognized ratably over time, which is the estimated membership period.

Hotel Operations, Food and Beverage Operations, Short-Term Vacation Rentals and Other Management Services – Hotel operations, food and beverage operations, short-term vacation rentals and other management services generate revenue from (1) the WaterColor Inn, WaterSound Inn and operation of the WaterColor Beach Club, (2) management of The Pearl Hotel, (3) short-term vacation rentals and (4) food and beverage operations. The WaterColor Inn, WaterSound Inn and operation of the WaterColor Beach Club generate revenue from service and/or daily rental fees, recognized at the point in time services are provided. Revenue generated from the Company’s management services are recognized over time as time elapses and the Company’s performance obligations are met. As discussed further in Note 8. Sale of Vacation Rental Management, the Company sold its short term vacation rental management business in December 2017. Following the December 2017 sale, the Company no longer manages third party vacation rentals, but continues to manage rental properties the Company owns. The Company’s food and beverage operations generate revenue from food and beverage sales, which are recognized at the point of sale.

Retail – The Company owns and operates retail outlets near its hospitality facilities that include the WaterColor store and four additional retail outlets. The Company’s retail outlets generate revenue from merchandise sales, which are recognized at the point of sale.

Leasing Revenue

Leasing revenue is excluded from Topic 606 and consists of long term rental revenue from multi-family, retail, office and commercial property, cell towers and other assets, which is recognized as earned, using the straight-line method over the life of each lease. Certain leases provide for tenant occupancy during periods for which no rent is due or where minimum rent payments change during the lease term. Accordingly, a receivable or liability is recorded representing the difference between the straight-line rent and the rent that is contractually due from the tenant. Leasing revenue includes properties located in the Company’s Beckrich Office Park, consolidated Pier Park North JV and Pier Park Crossings JV, as well as the Company’s industrial park, VentureCrossings and other properties.

Leasing revenue within the forestry segment consists primarily of hunting leases, which is recognized as income over the term of each lease. The Company’s marinas generate revenue from boat slip rentals recognized over the term of the lease. See Note 9. Leases for additional information related to leases.

Forestry Product Revenue

Revenue from the sale of the Company’s forestry products is primarily from open market sales of timber on site without the associated delivery costs and is derived from either pay-as-cut sales contracts or timber bid sales.

Under a pay-as-cut sales contract, the risk of loss and title to the specified timber transfers to the buyer when cut by the buyer, and the buyer or some other third party is responsible for all logging and hauling costs, if any. Revenue is recognized at the point in time when risk of loss and title to the specified timber are transferred.

Timber bid sales are agreements in which the buyer agrees to purchase and harvest specified timber (i.e., mature pulpwood and/or sawlogs) on a tract of land over the term of the contract. Unlike a pay-as-cut sales contract, risk of loss and title to the trees transfer to the buyer when the contract is signed and revenue is recognized at that point in time accordingly. The buyer pays the full purchase price when the contract is signed and the Company does not have any additional performance obligations.

The following represents revenue disaggregated by segment, good or service and timing:


	Year Ended December 31, 2019
						Commercial
		Residential				Leasing
		Real Estate		Hospitality		and Sales		Forestry		Other		Total
Revenue by Major Good/Service:
Real estate revenue	$	41,055	$	—	$	7,799	$	11,678	$	956	$	61,488
Hospitality revenue		496		45,616		—		—		—		46,112
Leasing revenue		35		104		14,659		783		—		15,581
Timber revenue		—		—		—		3,904		—		3,904
Total revenue	$	41,586	$	45,720	$	22,458	$	16,365	$	956	$	127,085

Timing of Revenue Recognition:
Recognized at a point in time	$	41,551	$	42,864	$	7,799	$	15,582	$	956	$	108,752
Recognized over time		—		2,752		—		—		—		2,752
Over lease term		35		104		14,659		783		—		15,581
Total revenue	$	41,586	$	45,720	$	22,458	$	16,365	$	956	$	127,085


	Year Ended December 31, 2018
						Commercial
		Residential				Leasing
		Real Estate		Hospitality		and Sales		Forestry		Other		Total
Revenue by Major Good/Service:
Real estate revenue (a)	$	42,761	$	—	$	4,801	$	1,807	$	2,814	$	52,183
Hospitality revenue		397		38,339		—		—		—		38,736
Leasing revenue		—		1,237		11,684		806		—		13,727
Timber revenue		108		—		—		5,522		—		5,630
Total revenue	$	43,266	$	39,576	$	16,485	$	8,135	$	2,814	$	110,276

Timing of Revenue Recognition:
Recognized at a point in time	$	43,266	$	36,303	$	4,801	$	7,329	$	2,814	$	94,513
Recognized over time		—		2,036		—		—		—		2,036
Over lease term		—		1,237		11,684		806		—		13,727
Total revenue	$	43,266	$	39,576	$	16,485	$	8,135	$	2,814	$	110,276

(a)

Residential real estate revenue includes revenue of $23.1 million in 2018 for a one-time receipt of RiverTown impact fees related to the 2014 RiverTown transaction. See Note 19. RiverTown Impact Fees.

Recently Adopted Accounting Pronouncements

Leases

In February 2016, the FASB issued ASU 2016‑02 that amends the existing accounting standards for lease accounting, including requiring lessees to recognize both finance and operating leases with terms of more than 12 months on the balance sheet. The accounting applied by a lessor is largely unchanged by this amendment. This amendment also required certain quantitative and qualitative disclosures about leasing arrangements. In January 2018, the FASB issued ASU 2018‑01, which provided an optional transition practical expedient to not evaluate under the new lease standard, existing or expired land easements that were not previously accounted for as leases. In July 2018, the FASB issued ASU 2018-10 that provided clarifications and improvements to ASU 2016-02. In July 2018, the FASB issued ASU 2018-11 that provided entities with an additional and optional transition method to apply the new standard at the adoption date and recognize a cumulative-effect adjustment to the beginning balance of retained earnings in the period of adoption. In December 2018, the FASB issued ASU 2018-20 that provided an accounting policy election for certain narrow-scope improvements for lessors. In March 2019, the FASB issued ASU 2019-01 that provided clarifications and improvements to ASU 2016-02. During the Company’s evaluation of ASU 2016-02, as amended, the following practical expedients and accounting policies with respect to Topic 842 have been elected and/or adopted effective January 1, 2019:

The Company, as lessee and as lessor, did not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases or (iii) initial direct costs for any expired or existing leases.

The Company, as lessee, did not apply the recognition requirements of Topic 842 to short-term (twelve months or less) leases. Instead, the Company, as lessee, recognizes the lease payments in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred.

The Company, as lessor, did not separate nonlease components from lease components and, instead, are accounting for each separate lease component and the nonlease components associated with that lease as a single component if the nonlease components otherwise would be accounted for under ASC Topic 606. The primary reason for this election is related to instances where common area maintenance is, or may be, a component of base rent within a lease agreement.

The Company adopted the new guidance, including amendments, as of January 1, 2019 and has elected to implement ASC 842 retrospectively using the cumulative-effect adjustment transition method as of the date of adoption. As a result, prior periods have not been restated. As of the date of adoption, a cumulative-effect adjustment was not necessary and the Company recognized an operating lease right-of use assets of $0.4 million and corresponding operating lease liabilities of $0.4 million based on the present value of minimum rental payments related to leases for which the Company is the lessee. The operating lease right-of-use assets and corresponding operating lease liabilities are included within other assets and other liabilities, respectively, on the consolidated balance sheets. There were no adjustments related to the leases for which the Company is the lessor. The adoption of this guidance did not materially impact results of operations or cash flows.

Codification Updates

In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections—Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization, and Miscellaneous Updates, that aligns SEC paragraphs in the codification with changes made in the above-referenced SEC rules to simplify disclosures, modernize the reporting and disclosure of information by registered investment companies and other items. This new guidance was effective upon issuance and did not have a material impact on the Company’s financial condition, results of operations and cash flows.

Recently Issued Accounting Pronouncements

Financial Instruments - Credit Losses

In June 2016, the FASB issued ASU 2016‑13 that requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected and requires that credit losses from available-for-sale debt securities be presented as an allowance for credit loss. In November 2018, the FASB issued ASU 2018-19, which clarifies that impairment of receivables from operating leases should be accounted for using lease guidance. In April 2019, the FASB issued ASU 2019-04, which clarifies and improves ASU 2016-13. In May 2019, the FASB issued ASU 2019-05, which provides an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. In November 2019, the FASB issued ASU 2019-11, which provides codification improvements to ASU 2016-13. This new guidance will be effective for the Company January 1, 2020 and implemented using a cumulative-effect adjustment to retained earnings as of the date of adoption. The Company has evaluated the impact of the adoption of this guidance, and as a result of this evaluation, determined it will not have a material impact on its financial condition, results of operations and cash flows.

Income Taxes

In December 2019, the FASB issued ASU 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendment also improves consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. This new guidance will be effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its financial condition, results of operations and cash flows.

Investments – Equity Securities, Investments-Equity Method and Joint Ventures and Derivatives and Hedging

In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force) which clarifies the interaction between the accounting standard on recognition and measurement of financial instruments in Topic 321, Investments – Equity Securities and Topic 323, Investments - Equity Method and Joint Ventures. The new guidance will be effective for annual and interim periods beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its financial condition, results of operations and cash flows.

Investment in Real Estate

12 Months Ended

Dec. 31, 2019

Investment in Real Estate

Investment in Real Estate

3. Investment in Real Estate

Real estate by property type and segment includes the following:


	December 31,		December 31,
	2019		2018
Development property:
Residential real estate	$	115,384	$	105,323
Hospitality		12,229		3,726
Commercial leasing and sales		101,446		73,128
Forestry		1,880		2,144
Corporate		2,631		2,497
Total development property		233,570		186,818

Operating property:
Residential real estate		11,985		11,985
Hospitality		94,838		88,405
Commercial leasing and sales		143,400		111,471
Forestry		21,189		19,765
Other		50		50
Total operating property		271,462		231,676
Less: Accumulated depreciation		74,256		67,500
Total operating property, net		197,206		164,176
Investment in real estate, net	$	430,776	$	350,994

Development property consists of land the Company is developing or intends to develop for sale or future operations and includes direct costs associated with the land, development and construction costs and indirect costs. Residential real estate includes residential communities such as Watersound Origins, SouthWood, WindMark Beach, as well as other communities. Hospitality development property consists of land, construction costs, development costs and improvements primarily related to the Camp Creek Lifestyle Village amenity center, a new hotel in Pier Park and a new hotel near the Northwest Florida Beaches International Airport, as well as other properties. Commercial leasing and sales development property primarily consists of land, construction costs and development costs for commercial, multi-family, assisted living and industrial uses, including the Watercrest JV, Watersound Origins Crossings JV, Pier Park Crossings JV, Pier Park Crossings Phase II JV, Beckrich Office Park, land holdings near the Northwest Florida Beaches International Airport and Port of Port St. Joe as well as other properties. Development property in the hospitality and commercial leasing and sales segments will be reclassified as operating property as it is placed into service.

Operating property includes the following components:


		December 31,		December 31,
		2019		2018
Land and land improvements	$	83,995	$	75,663
Buildings and building improvements		174,712		144,730
Timber		12,755		11,283
		271,462		231,676
Less: Accumulated depreciation		74,256		67,500
Total operating property, net	$	197,206	$	164,176

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

Depreciation expense related to real estate investments was $6.8 million, $6.0 million and $6.2 million in 2019, 2018 and 2017, respectively. Depletion and amortization expense related to the Company’s timber operations was $0.3 million in 2019 and $0.5 million in each 2018 and 2017.

Real Estate Joint Ventures

12 Months Ended

Dec. 31, 2019

Real Estate Joint Ventures

Real Estate Joint Ventures

4. Real Estate Joint Ventures

The Company enters into real estate JVs, from time to time, for the purpose of developing real estate and other business activities in which the Company may or may not have a controlling financial interest. GAAP requires consolidation of VIEs in which an enterprise has a controlling financial interest and is the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance and (b) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company examines specific criteria and uses judgment when determining whether the Company is the primary beneficiary and must consolidate a VIE. The Company continues to assess whether it is the primary beneficiary on an ongoing basis. Investments in JVs and limited partnerships in which the Company is not the primary beneficiary are accounted for by the equity method.

The timing of cash flows for additional required capital contributions related to the Company’s JVs varies by agreement. Some of the Company’s consolidated and unconsolidated JVs have entered into financing agreements, where the Company or its JV partners have provided guarantees. See Note 12. Debt, Net and Note 22. Commitments and Contingencies for additional information.

Consolidated Joint Ventures

Pier Park Crossings Phase II JV

Pier Park Crossings Phase II JV was created in October 2019, when the Company entered into a JV agreement to develop, manage and lease apartments in Panama City Beach, Florida. The JV parties are working together to develop and construct a 120 unit apartment community. The community is located on land in the Pier Park area that was contributed to the JV by the Company. As of December 31, 2019, the Company owned a 75.0% interest in the consolidated JV. The Company’s partner is responsible for the day-to-day activities of the JV. However, the Company has significant involvement in the design of the development and approves all major decisions, including project development, annual budgets and financing. The Company determined Pier Park Crossings Phase II JV is a VIE and that the Company is the VIE’s primary beneficiary as of December 31, 2019.

Reliant Title JV

Reliant Title JV was created in October 2019, when the Company entered into a JV agreement to own, operate and manage a real estate title insurance agency business. As of December 31, 2019, the Company owned a 66.0% interest in the consolidated JV. A wholly owned subsidiary of the Company is the managing member of Reliant Title JV and is responsible for the day-to-day activities of the JV. As the manager of the JV, as well as the majority member, the Company has the power to direct all of the activities of the JV that most significantly impact economic performance. The Company determined Reliant Title JV is a VIE and that the Company is the VIE’s primary beneficiary as of December 31, 2019.

Watercrest JV

Watercrest JV was created in May 2019, when the Company entered into a JV agreement to develop and operate a new assisted living and memory care community in Santa Rosa Beach, Florida. The JV parties are working together to develop and construct a 107 unit community. The community will be located on land that was contributed to the JV by the Company. As of December 31, 2019, the Company owned an 87.0% interest in the consolidated JV. The Company’s partner is responsible for the day-to-day activities of the JV. However, the Company has significant involvement in the design of the development and approves all major decisions, including project development, annual budgets and financing. The Company determined Watercrest JV is a VIE and that the Company is the VIE’s primary beneficiary as of December 31, 2019.

Watersound Origins Crossings JV

Watersound Origins Crossings JV was created in January 2019, when the Company entered into a JV agreement to develop, manage and lease apartments in Watersound, Florida. The JV parties are working together to develop and construct a 217 unit apartment community. The community will be located on land near the entrance to the Watersound Origins community, which was contributed to the JV by the Company. As of December 31, 2019, the Company owned a 75.0% interest in the consolidated JV. The Company’s partner is responsible for the day-to-day activities of the JV. However, the Company has significant involvement in the design of the development and approves all major decisions, including project development, annual budgets and financing. The Company determined Watersound Origins Crossings JV is a VIE and that the Company is the VIE’s primary beneficiary as of December 31, 2019.

Pier Park Crossings JV

In April 2017, the Company entered into a JV agreement to develop, manage and lease apartments in Panama City Beach, Florida. The JV parties are working together to construct the remaining 24 units of the 240 unit apartment community. The community is located on land in the Pier Park area that was contributed to the JV by the Company. As of December 31, 2019 and 2018 the Company owned a 75.0% interest in the consolidated JV. The Company’s partner is responsible for the day-to-day activities of the JV. However, the Company has significant involvement in the design of the development and approves all major decisions, including project development, annual budgets and financing. The Company determined Pier Park Crossings JV is a VIE and that the Company is the VIE’s primary beneficiary as of December 31, 2019 and 2018.

Pier Park North JV

During 2012, the Company entered into a JV agreement with a partner to develop a retail center at Pier Park North. As of December 31, 2019 and 2018, the Company owned a 60.0% interest in the consolidated JV. The Company’s partner is responsible for the day-to-day activities of the JV. However, the Company has significant involvement in the design of the development and approves all major decisions, including project development, annual budgets and financing. The Company determined the Pier Park North JV is a VIE and that the Company is the VIE’s primary beneficiary as of December 31, 2019 and 2018.

Windmark JV

As of December 31, 2018, the Company owned a 49.0% interest in Windmark JV. A wholly owned subsidiary of the Company was the managing member of Windmark JV and ran its day-to-day operations. Windmark JV owned and its members made major decisions related to the management and development of the WindMark Beach project. The Company determined Windmark JV was a VIE and that the Company was the VIE’s primary beneficiary as of December 31, 2018. During 2019, the Windmark JV distributed property to the two other JV members and a wholly owned subsidiary of the Company purchased the property from the two other members for a total consideration of $11.6 million and, as a result, the Company now owns 100.0% of the WindMark project.

Unconsolidated Joint Ventures

Investment in unconsolidated joint ventures includes the Company’s investment accounted for using the equity method. The following table presents detail of the Company’s investment in unconsolidated joint ventures and total outstanding debt of unconsolidated JVs:


	December 31,		December 31,
	2019		2018
Investment in unconsolidated joint ventures
Latitude Margaritaville Watersound JV (a)	$	791	$	—
Pier Park TPS JV		3,083		1,105
Busy Bee JV (b)		1,210		—
Total investment in unconsolidated joint ventures	$	5,084	$	1,105

Outstanding debt of unconsolidated JVs
Pier Park TPS JV	$	6,791	$	—
Busy Bee JV		1,451		—
Total outstanding debt of unconsolidated JVs (c)	$	8,242	$	—

(a)

JV was formed in June 2019.

(b)

JV was formed in July 2019.

(c)

See Note 22. Commitments and Contingencies for additional information.

The following table presents detail of the Company’s equity in loss from unconsolidated affiliates:


	Year Ended December 31, 2019
Equity in loss from unconsolidated affiliates
Latitude Margaritaville Watersound JV	$	71
Pier Park TPS JV		6
Total equity in loss from unconsolidated affiliates	$	77

Latitude Margaritaville Watersound JV

LMWS, LLC (“Latitude Margaritaville Watersound JV”) was created in June 2019, when the Company entered into a JV agreement to develop a 55+ active adult residential community in Bay County, Florida. The JV parties are working together to develop the first phase of the community and the sales center is currently under construction. The community will be located on land that will be contributed to the JV by the Company. The first phase is estimated to include approximately 3,500 residential homes which will be developed in smaller increments of discrete neighborhoods. As of December 31, 2019, the Company owned a 50.0% voting interest in the JV. Each JV member initially contributed and will continue to contribute an equal amount of cash towards the development and construction of the main spine infrastructure and amenities. The Company’s unimproved land contribution will be returned at an average of $10,000 as each home is sold by the JV. Per the JV agreement, the Company will provide interest-bearing financing in the form of a promissory note to the Latitude Margaritaville Watersound JV to finance the development of the pod-level, non-spine infrastructure, which will be repaid by the JV as each home is sold by the JV. The day-to-day activities of the JV will be managed through a board of managers, with each JV partner having equal voting rights. The Company has determined that Latitude Margaritaville Watersound JV is a VIE, but that the Company is not the primary beneficiary since it does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company’s investment in the Latitude Margaritaville Watersound JV is accounted for using the equity method.

Summarized financial information for Latitude Margaritaville Watersound JV is as follows:


	December 31,
	2019
BALANCE SHEETS:
Investment in real estate	$	1,116
Cash and cash equivalents		525
Total assets	$	1,641

Other liabilities	$	58
Equity		1,583
Total liabilities and equity	$	1,641


	Year Ended December 31, 2019
STATEMENT OF OPERATIONS:
Total expenses	$	142
Net loss	$	142

Pier Park TPS JV

Pier Park TPS, LLC was created in April 2018. The Company entered into a JV agreement to develop and operate a 124 room hotel in Panama City Beach, Florida. The hotel will be located on land in the Pier Park area that the Company contributed to the JV on January 14, 2019, with a fair value of $1.7 million. In addition, during 2019, the Company contributed cash of $0.2 million and mitigation bank credits of $0.1 million. As of December 31, 2018, the Company had an investment in the JV project of $1.1 million that was contributed to the JV during the first quarter of 2019. As of December 31, 2019 and 2018, the Company owned a 50.0% interest in the JV. The Company’s partner is responsible for the day-to-day activities of the JV. The Company has determined that Pier Park TPS JV is a VIE, but that the Company is not the primary beneficiary since it does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company’s investment in Pier Park TPS JV is accounted for using the equity method. See Note 22. Commitments and Contingencies for additional information related to debt guaranteed by the Company.

Summarized financial information for Pier Park TPS JV is as follows:


	December 31,		December 31,
	2019		2018
BALANCE SHEETS:
Investment in real estate	$	14,775	$	285
Cash and cash equivalents		51		64
Other assets		12		—
Total assets	$	14,838	$	349

Debt, net	$	6,480	$	—
Other liabilities		2,193		3
Equity		6,165		346
Total liabilities and equity	$	14,838	$	349

Busy Bee JV

SJBB, LLC was created in July 2019, when the Company entered into a JV agreement to construct, own and manage a Busy Bee branded fuel station and convenience store in Panama City Beach, Florida. The fuel station and convenience store will be located on land that the Company contributed to the JV on July 5, 2019. The investment in the unconsolidated JV of $1.2 million as of December 31, 2019 includes $1.4 million for the fair value of land contributed by the Company, which was offset by a $0.2 million note receivable from the JV partner. The project is currently under construction with no income or loss impacting the consolidated statements of income for 2019. As of December 31, 2019, the Company owned a 50.0% interest in the JV. The Company’s partner is responsible for the day-to-day activities of the JV. The Company has determined that Busy Bee JV is a VIE, but that the Company is not the primary beneficiary since it does not have the power to direct the activities that most significantly impact the economic performance of the JV. The Company’s investment in the Busy Bee JV is accounted for using the equity method. See Note 22. Commitments and Contingencies for additional information related to debt guaranteed by the Company.

Summarized financial information for Busy Bee JV is as follows:


	December 31,
	2019
BALANCE SHEETS:
Investment in real estate	$	3,886
Cash and cash equivalents		36
Other assets		28
Total assets	$	3,950

Debt, net	$	1,349
Other liabilities		181
Equity		2,420
Total liabilities and equity	$	3,950

ALP

Through November 2018, the Company was a partner in ALP and beneficially owned 23.9% of ALP’s outstanding beneficial interest units, for which the Company had no basis. In November 2018, the Company received a final distribution of $2.2 million, which is recorded in other income, net on the consolidated statements of income.

Investments

12 Months Ended

Dec. 31, 2019

Investments

Investments

5. Investments

Available-For-Sale Investments

Investments classified as available-for-sale securities were as follows:


	December 31, 2019
			Gross Unrealized		Gross Unrealized
	Amortized Cost		Gains		(Losses)		Fair Value
Investments - debt securities:
Corporate debt securities	$	178	$	—	$	(125)	$	53
		178		—		(125)		53
Restricted investments:
Short-term bond		2,239		11		—		2,250
Money market fund		114		—		—		114
		2,353		11		—		2,364
	$	2,531	$	11	$	(125)	$	2,417


	December 31, 2018
			Gross Unrealized		Gross Unrealized
	Amortized Cost		Gains		(Losses)		Fair Value
Investments - debt securities:
U.S. Treasury Bills	$	6,936	$	1	$	—	$	6,937
Corporate debt securities		2,908		—		(887)		2,021
		9,844		1		(887)		8,958
Restricted investments:
Short-term bond		3,274		—		(9)		3,265
Money market fund		167		—		—		167
		3,441		—		(9)		3,432
	$	13,285	$	1	$	(896)	$	12,390

During 2019, net realized gains from the sale of available-for-sale securities were $0.1 million, proceeds from the sale of available-for-sale securities were $4.0 million, proceeds from the maturity of available-for-sale securities were $7.0 million and purchases of available-for-sale securities were $0.1 million.

During 2018, net realized losses from the sale of available-for-sale securities were $1.0 million, proceeds from the sale of available-for-sale securities were $64.7 million, proceeds from the maturity of available-for-sale securities were $10.0 million and purchases of available-for-sale securities were $7.0 million.

The following table provides the available-for-sale investments unrealized loss position and related fair values:


	December 31, 2019
	Less Than 12 Months				12 Months or Greater
			Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses
Investments - debt securities:
Corporate debt securities	$	—	$	—	$	53	$	125


	December 31, 2018
	Less Than 12 Months				12 Months or Greater
			Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses
Investments - debt securities:
Corporate debt securities	$	—	$	—	$	1,843	$	887
Restricted investments:
Short-term bond		—		—		3,265		9
	$	—	$	—	$	5,108	$	896

As of December 31, 2019, the Company had unrealized losses of $0.1 million related to corporate debt securities. The Company had unrealized losses of $0.9 million as of December 31, 2018 related to corporate debt securities and restricted investments. As of December 31, 2019 and 2018, the Company did not intend to sell the investments with a material unrealized loss and it is more likely than not that the Company will not be required to sell any of these securities prior to their anticipated recovery. During 2018, the Company determined that unrealized losses related to its corporate debt securities were other-than-temporary and recorded an impairment of $2.3 million for credit-related loss in investment income, net in the Company’s consolidated statements of income.

The amortized cost and estimated fair value of investments – debt securities and restricted investments classified as available-for-sale, by contractual maturity are shown in the following table. Actual maturities may differ from contractual maturities since certain borrowers have the right to call or prepay obligations.


	December 31, 2019
	Amortized Cost		Fair Value
Due in one year or less	$	178	$	53
Restricted investments		2,353		2,364
	$	2,531	$	2,417

Investments – Equity Securities

As of December 31, 2019 and 2018, investments – equity securities included $9.7 million and $36.1 million, respectively, of preferred stock investments recorded at fair value. During 2019 and 2018, the Company had net unrealized losses on investments – equity securities of $5.3 million and $3.0 million respectively, which were included within investment income, net on the consolidated statements of income. Prior to 2018, unrealized gains and losses related to investments – equity securities were recognized in other comprehensive income (loss). As of January 1, 2018, the outstanding unrealized losses of $0.9 million were reclassified to retained earnings with the adoption of ASU 2016-01.

Investment Management Agreement

Mr. Bruce R. Berkowitz is the Chairman of the Company’s Board. He is the Manager of, and controls entities that own and control, Fairholme Holdings, LLC, which wholly owns FCM. Mr. Berkowitz is the Chief Investment Officer of FCM, which has provided investment advisory services to the Company since April 2013. FCM does not receive any compensation for services as the Company’s investment advisor. As of December 31, 2019, clients of FCM, including Mr. Berkowitz, beneficially owned approximately 44.30% of the Company’s common stock. FCM and its client, The Fairholme Fund, a series of the Fairholme Funds, Inc., may be deemed affiliates of the Company.

Pursuant to the terms of the Investment Management Agreement, as amended, with the Company, FCM agreed to supervise and direct the investment accounts established by the Company in accordance with the investment guidelines and restrictions approved by the Company. The investment guidelines are set forth in the Investment Management Agreement and require that, as of the date of any investment: (i) no more than 15% of the investment account may be invested in securities of any one issuer (excluding the U.S. Government), (ii) any investment in any one issuer (excluding the U.S. Government) that exceeds 10% of the investment account, but not 15%, requires the consent of at least two members of the Investment Committee, (iii) 25% of the investment account must be held in cash and cash equivalents, (iv) the investment account is permitted to be invested in common equity securities; however, common stock investments shall be limited to exchange-traded common equities, shall not exceed 5% ownership of a single issuer and, cumulatively, the common stock held in the Company’s investment portfolio shall not exceed $100.0 million market value and (v) the aggregate market value of investments in common stock, preferred stock or other equity investments cannot exceed 25% of the market value of the Company’s investment portfolio at the time of purchase.

Financial Instruments and Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Financial Instruments and Fair Value Measurements

Financial Instruments and Fair Value Measurements

6. Financial Instruments and Fair Value Measurements

Fair Value Measurements

The financial instruments measured at fair value on a recurring basis are as follows:


	December 31, 2019
							Total Fair
	Level 1		Level 2		Level 3		Value
Cash equivalents:
Money market funds	$	21,043	$	—	$	—	$	21,043
Commercial paper		138,220		—		—		138,220
U.S. Treasury Bills		6,990		—		—		6,990
		166,253		—		—		166,253

Investments - debt securities:
Corporate debt securities		—		53		—		53
		—		53		—		53

Investments - equity securities:
Preferred stock		—		9,746		—		9,746
		—		9,746		—		9,746

Restricted investments:
Short-term bond		2,250		—		—		2,250
Money market fund		114		—		—		114
		2,364		—		—		2,364
	$	168,617	$	9,799	$	—	$	178,416


	December 31, 2018
							Total Fair
	Level 1		Level 2		Level 3		Value
Cash equivalents:
Money market funds	$	43,346	$	—	$	—	$	43,346
Commercial paper		107,586		—		—		107,586
U.S. Treasury Bills		29,998		—		—		29,998
		180,930		—		—		180,930

Investments - debt securities:
U.S. Treasury Bills		6,937		—		—		6,937
Corporate debt securities		—		2,021		—		2,021
		6,937		2,021		—		8,958

Investments - equity securities:
Preferred stock		10,470		25,662		—		36,132

Restricted investments:
Short-term bond		3,265		—		—		3,265
Money market fund		167		—		—		167
		3,432		—		—		3,432
	$	201,769	$	27,683	$	—	$	229,452

Money market funds, commercial paper, U.S. Treasury Bills, certain preferred stock investments and short-term bonds are measured based on quoted market prices in an active market and categorized within Level 1 of the fair value hierarchy. Money market funds, commercial paper and short term U.S. Treasury Bills with a maturity date of 90 days or less from the date of purchase are classified as cash equivalents in the Company’s consolidated balance sheets.

The Company’s corporate debt securities and certain preferred stock investments are not traded on a nationally recognized exchange, but are traded in the U.S. over-the-counter market where there is less trading activity and the investments are measured primarily using pricing data from external pricing services that report prices observed for recently executed market transactions. For these reasons, the Company has determined that corporate debt securities and certain preferred stock investments are categorized as Level 2 financial instruments since their fair values were determined from market inputs in an inactive market.

Restricted investments are included within other assets on the consolidated balance sheets and include certain of the surplus assets that were transferred from the Company’s Pension Plan to a suspense account in the Company’s 401(k) plan in December 2014. The Company has retained the risks and rewards of ownership of these assets; therefore, the assets held in the suspense account are included in the Company’s consolidated financial statements until they are allocated to participants. As of December 31, 2019 and 2018, the assets held in the suspense account were invested in Vanguard Money Market Funds, which invest in short-term, high quality securities or short-term U.S. government securities and seek to provide current income and preserve shareholders’ principal investment and a Vanguard Short-Term Bond Fund, which invests in money market instruments and short-term high quality bonds, including asset-backed, government, and investment grade corporate securities with an expected maturity of 0‑3 years. The Vanguard Money Market Funds and Vanguard Short-Term Bond Fund are measured based on quoted market prices in an active market and categorized within Level 1 of the fair value hierarchy. The Company’s Retirement Plan Investment Committee is responsible for investing decisions and allocation decisions of the suspense account. See Note 18. Employee Benefit Plan.

Liabilities measured at fair value on a recurring basis are as follows:


		December 31, 2019
	Location in							Total Fair
	Balance Sheet	Level 1		Level 2		Level 3		Value
Derivative Liabilities:
Interest rate swap	Other liabilities	$	—	$	336	$	—	$	336
		$	—	$	336	$	—	$	336

In June 2019 the Company entered into an interest rate swap agreement designated as a cash flow hedge to manage the interest rate risk associated with variable rate debt. The interest rate swap is effective June 1, 2021 and matures on June 1, 2024 and fixed the variable rate debt on the notional amount of related debt of $20.0 million. As of December 31, 2019, the interest rate swap was recorded at its estimated fair value, based on level 2 measurements, of $0.3 million and is included within other liabilities on the consolidated balance sheet. The gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the period during which the hedged transaction affects earnings. The Company did not reclassify any amounts out of other comprehensive income into interest expense during December 31, 2019. See Note 12. Debt, Net for additional information.

Investment in Unconsolidated Joint Ventures

The Company evaluates its investment in unconsolidated JVs for impairment during each reporting period. A series of operating losses of an investee or other factors may indicate that a decrease in the value of the Company’s investment in the unconsolidated JV has occurred that is other-than-temporary. The amount of impairment recognized is the excess of the investment’s carrying value over its estimated fair value. The fair value of the Company’s investment in unconsolidated JVs is determined primarily using a discounted cash flow model to value the underlying net assets of the respective JV. The fair value of investment in unconsolidated JVs required to be assessed for impairment is determined on a nonrecurring basis using Level 3 inputs in the fair value hierarchy. No impairment for unconsolidated JVs was recorded during 2019 and 2018. See Note 4. Real Estate Joint Ventures for additional information.

Long-lived Assets

The Company reviews its long lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The fair value of long-lived assets required to be assessed for impairment is determined on a nonrecurring basis using Level 3 inputs in the fair value hierarchy. During 2019 the Company did not record any impairment charges related to long-lived assets. During 2018 and 2017, the Company recorded impairment charges of $0.1 million and $0.7 million, respectively, included in cost of hospitality revenue, related to non-strategic hospitality assets.

Fair Value of Financial Instruments

The Company uses the following methods and assumptions in estimating fair value for financial instruments:

The fair value of the investments held by SPE - time deposit is based on the present value of future cash flows at the current market rate.

The fair value of the investments held by SPE - U.S. Treasury Bills are measured based on quoted market prices in an active market.

The fair value of debt is based on discounted future expected cash flows based on current market rates for financial instruments with similar risks, terms and maturities.

The fair value of the Senior Notes held by SPE is based on the present value of future cash flows at the current market rate.

The carrying amount and estimated fair value, measured on a nonrecurring basis, of the Company’s financial instruments were as follows:


	December 31, 2019					December 31, 2018
	Carrying		Estimated			Carrying		Estimated
	value		Fair value		Level	value		Fair value		Level
Assets
Investments held by SPEs:
Time deposit	$	200,000	$	200,000	3	$	200,000	$	200,000	3
U.S. Treasury Bills and cash	$	6,771	$	6,712	1	$	7,384	$	7,092	1
Liabilities
Debt
Fixed-rate debt	$	89,969	$	92,276	2	$	68,146	$	67,126	2
Variable-rate debt		4,538		4,538	2		2,830		2,830	2
Total debt	$	94,507	$	96,814		$	70,976	$	69,956
Senior Notes held by SPE	$	177,026	$	204,347	3	$	176,775	$	193,293	3

Investments and Senior Notes Held by Special Purpose Entities

In connection with a real estate sale in 2014, the Company received consideration including the $200.0 million fifteen-year installment Timber Note issued by Panama City Timber Finance Company, LLC. The Company contributed the Timber Note and assigned its rights as a beneficiary under a letter of credit to Northwest Florida Timber Finance, LLC. Northwest Florida Timber Finance, LLC monetized the Timber Note by issuing $180.0 million aggregate principal amount of its 4.8% Senior Secured Notes due in 2029 at an issue price of 98.5% of face value to third party investors. The investments held by Panama City Timber Finance Company, LLC as of December 31, 2019, consist of a $200.0 million time deposit that, subsequent to April 2, 2014, pays interest at 4.0% and matures in March 2029, U.S. Treasuries of $6.4 million and cash of $0.4 million. The Senior Notes held by Northwest Florida Timber Finance, LLC as of December 31, 2019 consist of $177.0 million, net of the $3.0 million discount and debt issuance costs. Panama City Timber Finance Company, LLC and Northwest Florida Timber Finance, LLC are VIEs, which the Company consolidates as the primary beneficiary of each entity.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Hurricane Michael	12 Months Ended
Hurricane Michael	Dec. 31, 2019
Hurricane Michael
Hurricane Michael	7. Hurricane Michael On October 10, 2018, Hurricane Michael made landfall in the Florida Panhandle, which resulted in widespread damage to the area. The majority of the Company’s properties incurred minimal or no damage; however the Company’s Bay Point Marina in Bay County and Port St. Joe Marina in Gulf County, as well as certain timber, commercial and multi-family leasing assets were impacted. The marinas suffered significant damage requiring long-term restoration and will remain closed during the reconstruction of significant portions of these assets, which is currently underway. The Company maintains property and business interruption insurance, subject to certain deductibles, and is continuing to assess claims under such policies; however, the timing and amount of insurance proceeds are uncertain and may not be sufficient to cover all losses. Timing differences are likely to exist between the impairment losses, capital expenditures made to repair or restore properties and recognition and receipt of insurance proceeds reflected in the Company’s financial statements. During 2019, $1.3 million of insurance proceeds were received related to business interruption insurance, included within cost of hospitality revenue on the consolidated statements of income. Costs incurred due to business interruption, primarily at the marinas, are continuing to be evaluated. The Company does not expect revenue at these locations until the properties have been rebuilt, but will incur costs for employee retention and property maintenance. During 2018, the Company recorded a loss on disposal of assets of $7.3 million related to the net book value of the marinas, certain forestry assets, commercial and multi-family leasing assets. During 2019, the Company recognized $5.3 million of insurance proceeds. During 2018, the Company recognized $7.2 million of insurance proceeds, of which $6.7 million was included in accounts receivable, net and were received during 2019. The loss on disposal of assets and insurance proceeds were recorded in other income, net on the consolidated statements of income. During 2018, the Company recorded timber loss expense of $0.3 million included in other income, net on the consolidated statements of income. The majority of the Company’s other timberlands had little or no damage. During 2019 and 2018, the Company incurred costs of $2.7 million and $1.0 million, respectively for additional hurricane expense items such as repairs, clean-up costs, landscape repairs, demolition costs, professional fees, food spoilage, damaged inventory and temporary housing for employees included in other income, net on the consolidated statements of income. The Company expects that its results of operations related to the marinas and timber assets will be impacted in the near term.

Sale of Vacation Rental Management	12 Months Ended
Sale of Vacation Rental Management	Dec. 31, 2019
Sale of Vacation Rental Management
Sale of Vacation Rental Management	8. Sale of Vacation Rental Management In December 2017, the Company entered into and consummated the PCR Purchase Agreement with PCR for the sale of the Company’s short term vacation rental management business. In December 2017, the Company completed the sale to PCR for approximately $9.9 million, which resulted in a net gain of $9.8 million.

Leases

12 Months Ended

Dec. 31, 2019

Leases

Leases

9. Leases

Leasing revenue consists of rental revenue from multi-family, retail, office and commercial property, cell towers and other assets, which is recognized as earned, using the straight-line method over the life of each lease. The Company’s leases have remaining lease terms up to the year 2036, some of which include options to terminate or extend.

The components of leasing revenue are as follows:


	Year Ended
	December 31, 2019
Leasing revenue
Lease payments	$	11,637
Variable lease payments		3,944
Total leasing revenue	$	15,581

Minimum future base rental revenue on non-cancelable leases subsequent to December 31, 2019, for the years ending December 31 are:



2020	$	14,595
2021		10,864
2022		9,896
2023		7,836
2024		6,547
Thereafter		17,762
	$	67,500

As of December 31, 2019, the Company leased certain office equipment under a finance lease and had operating leases for property and equipment used in corporate and hospitality operations with remaining lease terms up to the year 2049. Certain leases include options to purchase, terminate or renew for one or more years, which are included in the lease term used to establish right-of-use assets and lease liabilities when it is reasonably certain that the option will be exercised. Finance lease right-of-use assets are included within property, plant and equipment and operating lease right-of-use assets are included within other assets on the consolidated balance sheets, which represent the Company’s right to use an underlying asset during a lease term for leases in excess of one year. Corresponding finance lease liability and operating lease liabilities are included within other liabilities on the consolidated balance sheets and are related to the Company’s obligation to make lease payments for leases in excess of one year. Prior to the adoption ASU 2016-02 on January 1, 2019 lease assets and liabilities for operating leases were not recognized. The Company uses its incremental borrowing rate to determine the present value of the lease payments since the rate implicit in each lease is not readily determinable.

The components of lease expense are as follows:



	Year Ended
	December 31, 2019
Lease cost
Finance lease cost:
Amortization of right-of-use assets	$	40
Interest on lease liability		9
Operating lease cost		238
Short-term lease cost		721
Total lease cost	$	1,008

Other information
Weighted-average remaining lease term - finance lease (in years)		4.2
Weighted-average remaining lease term - operating leases (in years)		3.1
Weighted-average discount rate - finance lease		5.0%
Weighted-average discount rate - operating leases		5.0%

The aggregate payments of finance lease liability subsequent to December 31, 2019, for the years ending December 31 are:


2020	$	54
2021		54
2022		54
2023		54
2024		10
Total		226
Less imputed interest		(22)
Total finance lease liability	$	204

The aggregate payments of operating lease liabilities subsequent to December 31, 2019, for the years ending December 31 are:


2020	$	246
2021		180
2022		102
2023		63
2024		12
Thereafter		293
Total		896
Less imputed interest		(205)
Total operating lease liabilities	$	691

Other Assets

12 Months Ended

Dec. 31, 2019

Other Assets

Other Assets

10. Other Assets

Other assets consist of the following:


	December 31,		December 31,
	2019		2018
Restricted investments	$	2,364	$	3,432
Accounts receivable, net		6,957		14,061
Homesite sales receivable		5,211		2,977
Claim settlement receivable		—		2,679
Notes receivable		3,252		2,265
Income tax receivable		2,843		3,914
Prepaid expenses		6,592		6,751
Straight-line rent		3,292		3,581
Operating lease right-of-use assets		691		—
Other assets		5,715		5,069
Retained interest investments		12,214		11,536
Accrued interest receivable for Senior Notes held by SPE		2,938		2,938
Total other assets	$	52,069	$	59,203

Restricted Investments

The Company’s restricted investments are related to the Company’s deferred compensation plan. As part of the Pension Plan termination in 2014, the Company directed the Pension Plan to transfer the Pension Plan’s surplus assets into a suspense account in the Company’s 401(k) plan. The Company has retained the risks and rewards of ownership of these assets; therefore, the assets held in the suspense account are included in the Company’s consolidated balance sheets until they are allocated to current or future 401(k) plan participants for up to the next two years. See Note 18. Employee Benefit Plan.

Accounts Receivable, Net

As of December 31, 2018, accounts receivable, net included $6.7 million of insurance proceeds receivable from the Company’s insurance carriers for property damage related to Hurricane Michael, which were received during 2019. See Note 7. Hurricane Michael for additional information.

Homesite Sales Receivable

Homesite sales receivable from contracts with customers include estimated homesite residuals and certain estimated fees that are recognized as revenue at the time of sale to homebuilders, subject to constraints. Any change in circumstances from the estimated amounts will be updated at each reporting period. The receivable will be collected as the homebuilders build the homes and sell to retail consumers, which can occur over multiple years. See Note 2. Summary of Significant Accounting Policies for additional information. The following table presents the changes in homesite sales receivable:


				Increases Due To		Decreases Due to
		Balance		Revenue Recognized		Amounts		Balance
		January 1, 2019		for Homesites Sold		Received/Transferred		December 31, 2019
Homesite sales receivable	$	2,977	$	4,755	$	(2,521)	$	5,211


				Increases Due To		Decreases Due to
		Balance		Revenue Recognized		Amounts		Balance
		January 1, 2018		for Homesites Sold		Received/Transferred		December 31, 2018
Homesite sales receivable	$	2,585	$	2,085	$	(1,693)	$	2,977

Claim Settlement Receivable

The remaining settlement amount of $2.7 million as of December 31, 2018 was received in October 2019. Interest income for the years ended December 31, 2019 and 2018 was $0.1 million and for the year ended December 31, 2017 was $0.2 million.

Notes Receivable

Notes receivable consist of the following:


	December 31,		December 31,
	2019		2018
Interest bearing homebuilder note, secured by the real estate sold — 5.5% interest rate, due June 2021	$	1,514	$	—
Interest bearing homebuilder note, secured by the real estate sold — 5.5% interest rate, due December 2021		872		—
Interest bearing note with a JV partner, secured by the partner's membership interest in the JV - 8.0% interest rate, due May 2039		363		—
Interest bearing note with a JV partner, secured by the partner's membership interest in the JV - 8.0% interest rate, due July 2039		206		—
Interest bearing homebuilder note, secured by the real estate sold — 6.3% interest rate, due March 2020		128		150
Various mortgage notes, secured by certain real estate, bearing interest at various rates		85		141
Interest bearing homebuilder note, secured by the real estate sold — 5.5% interest rate, due June 2020		84		422
Interest bearing homebuilder note, secured by the real estate sold — 5.5% interest rate, paid in December 2019		—		749
Pier Park Community Development District notes, non-interest bearing, paid in August 2019		—		803
Total notes receivable	$	3,252	$	2,265

The Company may allow homebuilders to pay for homesites during the home construction period in the form of homebuilder notes. The Company evaluates the carrying value of all notes and the need for an allowance for doubtful notes receivable at each reporting date. As of December 31, 2019 and 2018, there was no allowance for doubtful notes receivable.

Retained Interest Investments

The Company has a beneficial interest in certain bankruptcy-remote qualified SPEs used in the installment sale monetization of certain sales of timberlands in 2007 and 2008. The SPEs’ assets are not available to satisfy the Company’s liabilities or obligations and the liabilities of the SPEs are not the Company’s liabilities or obligations. Therefore, the SPEs’ assets and liabilities are not consolidated in the Company’s financial statements as of December 31, 2019 and 2018. The Company’s continuing involvement with the SPEs is the receipt of the net interest payments and the remaining principal of approximately $16.7 million to be received at the end of the installment notes’ fifteen year maturity period, in 2022 through 2024. The Company has a beneficial or retained interest investment related to these SPEs of $12.2 million and $11.5 million as of December 31, 2019 and 2018, respectively, recorded in other assets on the Company’s consolidated balance sheets.

Property and Equipment, Net

12 Months Ended

Dec. 31, 2019

Property, Plant and Equipment, Net

Property and Equipment, Net

11. Property and Equipment, Net

Property and equipment, net consists of the following:


	December 31,		December 31,
	2019		2018
Railroad and equipment	$	33,626	$	33,626
Furniture and fixtures		24,062		22,438
Machinery and equipment		11,100		8,964
Office equipment		5,920		5,237
Autos, trucks and aircraft		6,274		988
		80,982		71,253
Less: Accumulated depreciation		63,223		60,271
		17,759		10,982
Construction in progress		1,259		1,049
Total property and equipment, net	$	19,018	$	12,031

Depreciation expense on property and equipment was $3.2 million, $2.4 million and $1.9 million in 2019, 2018 and 2017, respectively.

Debt, Net

12 Months Ended

Dec. 31, 2019

Debt

Debt

12. Debt, Net

Debt consists of the following:


	December 31, 2019						December 31, 2018
			Unamortized						Unamortized
			Discount and						Discount and
			Debt Issuance						Debt Issuance
	Principal		Costs		Net		Principal		Costs		Net
PPN JV Loan, due November 2025, bearing interest at 4.1%	$	45,514	$	380	$	45,134	$	46,423	$	446	$	45,977
PPC JV Loan, insured by HUD, due June 2060, bearing interest at 4.0%		34,610		1,087		33,523		15,399		1,114		14,285
Community Development District debt, secured by certain real estate or other collateral, due May 2023 through May 2039, bearing interest at 3.6% to 6.0%		6,977		—		6,977		6,324		—		6,324
Watersound Origins Crossings JV Loan, due May 2024, bearing interest at 5.0%		2,868		454		2,414		—		—		—
Beach Homes Loan, due May 2029, bearing interest at LIBOR plus 1.7% (effective rate of 3.5% at December 31, 2019)		1,594		20		1,574		—		—		—
Pier Park Outparcel Construction Loan, due March 2027, bearing interest at LIBOR plus 1.7% (effective rate of 3.5% at December 31, 2019)		1,535		14		1,521		1,585		16		1,569
WaterColor Crossings Construction Loan, due February 2029, bearing interest at LIBOR plus 1.7% (effective rate of 3.5% at December 31, 2019)		1,409		23		1,386		1,245		26		1,219
Total debt	$	94,507	$	1,978	$	92,529	$	70,976	$	1,602	$	69,374

In October 2015, the Pier Park North JV entered into a $48.2 million loan, secured by a first lien on, and security interest in, a majority of the Pier Park North JV’s property. The PPN JV Loan provides for principal and interest payments with a final balloon payment at maturity. In connection with the PPN JV Loan, the Company entered into a limited guarantee in favor of the lender, based on its 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.

In May 2018, the Pier Park Crossings JV entered into a $36.6 million loan, insured by HUD, to finance the construction of apartments in Panama City Beach, Florida. The PPC JV Loan provides for interest only payments during the first twenty-four months and monthly principal and interest payments thereafter through maturity in June 2060. The PPC JV Loan may not be prepaid prior to July 1, 2020. From July 1, 2020 through June 30, 2030, a prepayment premium is due to the lender of 1.0% - 10.0% of any prepaid principal. The PPC JV Loan is secured by the Pier Park Crossings JV’s real property and the assignment of rents and leases.

CDD bonds financed the construction of infrastructure improvements at some of the Company’s projects. The principal and interest payments on the bonds are paid by assessments on the properties benefited by the improvements financed by the bonds. The Company has recorded a liability for CDD debt that is associated with platted property, which is the point at which it becomes fixed or determinable. Additionally, the Company has recorded a liability for the portion of the CDD debt that is associated with unplatted property if it is probable and reasonably estimable that the Company will ultimately be responsible for repayment. The Company’s total CDD debt assigned to property it owns was $17.7 million and $19.9 million at December 31, 2019 and 2018, respectively. The Company pays interest on this total outstanding CDD debt.

In March 2017, a wholly owned subsidiary of the Company entered into a $1.6 million construction loan to finance the construction of a commercial leasing property located in Panama City Beach, Florida (the “Pier Park Outparcel Construction Loan”). The Pier Park Outparcel Construction Loan provides for principal and interest payments with a final balloon payment at maturity. The Pier Park Outparcel Construction Loan is secured by the real property, assignment of rents and the security interest in the rents and personal property.

In February 2018, a wholly owned subsidiary of the Company entered into a $1.9 million construction loan to finance the construction of a commercial leasing property located in Santa Rosa Beach, Florida (the “WaterColor Crossings Construction Loan”). The WaterColor Crossings Construction Loan provides for monthly principal and interest payments with a final balloon payment at maturity. The WaterColor Crossings Construction Loan is secured by the real property, assignment of rents and the security interest in the rents and personal property. In connection with the WaterColor Crossings Construction Loan, the Company executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the WaterColor Crossings Construction Loan.

In May 2018, a wholly owned subsidiary of the Company entered into a $1.7 million construction loan to finance the construction of two beach homes located in Panama City Beach, Florida (the “Beach Homes Loan”). The Beach Homes Loan provides for monthly principal and interest payments with a final balloon payment at maturity. The Beach Homes Loan is secured by the real property, assignment of rents and the security interest in the rents and personal property. In connection with the Beach Homes Loan, the Company executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Beach Homes Loan.

In May 2019, the Watersound Origins Crossings JV entered into a $37.9 million loan to finance the construction of apartments in Watersound, Florida. The Watersound Origins Crossings JV Loan provides for interest only payments for the first thirty months and principal and interest payments thereafter through maturity in May 2024. The Watersound Origins Crossings JV Loan is secured by the real property, assignment of rents and the security interest in the rents and personal property. In connection with the Watersound Origins Crossings JV Loan, the Company executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Watersound Origins Crossings JV Loan. The Company is the sole guarantor and will receive a fee related to the guarantee from its JV partner based on the JV partner’s ownership percentage.

In June 2019, the Watercrest JV entered into a $22.5 million loan to finance the construction of an assisted living community in Santa Rosa Beach, Florida. The Watercrest JV Loan provides for interest only payments for the first thirty-six months and principal and interest payments thereafter through maturity in June 2047. The Watercrest JV Loan is secured by the real property, assignment of rents, leases and deposits and the security interest in the rents and personal property. In connection with the Watercrest JV Loan, the Company executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Watercrest JV Loan. The Company is the sole guarantor and will receive a fee related to the guarantee from its JV partner based on the JV partner’s ownership percentage. The Company entered into an interest rate swap to hedge cash flows tied to changes in the underlying floating interest rate tied to LIBOR. The interest rate swap is effective June 1, 2021 and matures on June 1, 2024 and fixed the variable rate debt on the notional amount of related debt of $20.0 million to a rate of 4.37%. As of December 31, 2019, there was no principal balance and the JV incurred $0.3 million of loan costs related to the Watercrest JV Loan.

In August 2019, a wholly owned subsidiary of the Company entered into a $5.5 million loan to finance the construction of an office building in Panama City Beach, Florida. The Beckrich Building III Loan provides for interest only payments for the first twelve months and principal and interest payments thereafter through maturity in August 2029. The Beckrich Building III Loan is secured by the real property, assignment of leases, rents and profits and the security interest in the rents and personal property. In connection with the Beckrich Building III Loan, the Company executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Beckrich Building III Loan. As of December 31, 2019, there was no principal balance and the Company incurred $0.1 million of loan costs related to the Beckrich Building III Loan.

In October 2019, the Pier Park Crossings Phase II JV entered into a $17.5 million loan to finance the construction of apartments in Panama City Beach, Florida. The PPC II JV Loan provides for interest only payments for the first twenty-four months and principal and interest payments thereafter through maturity in October 2024. The PPC II JV Loan is secured by the real property, assignment of rents and leases and the security interest in the rents, leases and personal property. In connection with the PPC II JV Loan, the Company executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the PPC II JV Loan. The Company is the sole guarantor and will receive a fee related to the guarantee from its JV partner based on the JV partner’s ownership percentage. As of December 31, 2019, there was no principal balance and the Company incurred $0.3 million of loan costs related to the PPC II JV Loan.

The Company’s financing agreements are subject to various customary debt covenants and as of December 31, 2019 the Company was in compliance with the financial debt covenants.

The aggregate maturities of debt subsequent to December 31, 2019 are:


	December 31,
	2019
2020	$	2,029
2021		2,242
2022		2,293
2023		2,319
2024		5,079
Thereafter		80,545
	$	94,507

Other Liabilities

12 Months Ended

Dec. 31, 2019

Other Liabilities

Other Liabilities

13. Other Liabilities

Other liabilities consist of the following:


	December 31,		December 31,
	2019		2018
Accounts payable	$	16,207	$	10,148
Finance lease liability		204		—
Operating lease liabilities		691		—
Accrued compensation		3,151		3,112
Other accrued liabilities		3,277		2,560
Deferred revenue		18,972		17,478
Club initiation fees		6,917		5,676
Club membership deposits		3,985		4,286
Advance deposits		946		1,277
Accrued interest expense for Senior Notes held by SPE		2,850		2,850
Total other liabilities	$	57,200	$	47,387

Deferred revenue as of December 31, 2019 and 2018 includes $12.5 million related to a 2006 agreement pursuant to which the Company agreed to sell land to the Florida Department of Transportation. Revenue is recognized when title to a specific parcel is legally transferred.

Club initiation fees are recognized as revenue over the estimated average duration of membership, which is evaluated periodically. The following table presents the changes in club initiation fees related to contracts with customers:


		Balance		Increases Due To		Decreases Due to		Balance
		January 1, 2019		Cash Received		Revenue Recognized		December 31, 2019
Contract liabilities
Club initiation fees	$	5,676	$	3,083	$	(1,842)	$	6,917


		Balance		Increases Due To		Decreases Due to		Balance
		January 1, 2018		Cash Received		Revenue Recognized		December 31, 2018
Contract liabilities
Club initiation fees	$	5,199	$	1,886	$	(1,409)	$	5,676

Advance deposits consist of deposits received on hotel rooms. Advance deposits are recorded as other liabilities in the consolidated balance sheets without regard to whether they are refundable and are recognized as income at the time the service is provided for the related deposit.

Income Taxes

12 Months Ended

Dec. 31, 2019

Income Taxes

Income Taxes

14. Income Taxes

Income tax expense (benefit) consist of the following:


	Year Ended December 31,
	2019		2018		2017
Current:
Federal	$	1,070	$	4,305	$	7,418
State		—		—		48
Total		1,070		4,305		7,466
Deferred:
Federal		5,903		488		(23,512)
State		2,474		(5,529)		(1,835)
Total		8,377		(5,041)		(25,347)
Income tax expense (benefit)	$	9,447	$	(736)	$	(17,881)

Total income tax expense (benefit) was allocated in the consolidated financial statements as follows:


	Year Ended December 31,
	2019		2018		2017
Income tax expense (benefit)	$	9,447	$	(736)	$	(17,881)
Income tax recorded in accumulated other comprehensive loss
Income tax expense (benefit)		116		685		(2,488)
Total income tax expense (benefit)	$	9,563	$	(51)	$	(20,369)

Income tax expense (benefit) attributable to income from operations differed from the amount computed by applying the statutory federal income tax rate of 21% as of December 31, 2019 and 2018 and 35% as of December 31, 2017 to pre-tax income or loss as a result of the following:


	Year Ended December 31,
	2019		2018		2017
Tax at the statutory federal rate	$	7,607	$	6,643	$	14,594
State income taxes (net of federal benefit)		1,477		1,392		1,340
Decrease in valuation allowance, net		—		(4,993)		(142)
Decrease in uncertain tax positions		—		(2,165)		—
Change in US and State tax rates		1,006		(1,035)		(33,542)
Benefit of Qualified Opportunity Zone investment		(561)		—		—
Dividend received deduction		(188)		(322)		(530)
Other permanent items		106		(256)		399
Total income tax expense (benefit)	$	9,447	$	(736)	$	(17,881)

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and deferred tax liabilities are presented below:


	December 31,		December 31,
	2019		2018
Deferred tax assets:
State net operating loss carryforwards	$	14,316	$	15,709
Impairment losses		36,751		38,907
Prepaid income from land sales		3,180		2,597
Capitalized costs		2,468		2,107
Reserves and accruals		1,672		1,789
Unrealized losses on investments		2,282		1,008
Other		765		711
Total gross deferred tax assets		61,434		62,828
Deferred tax liabilities:
Investment in real estate and property and equipment basis differences		4,000		2,358
Deferred gain on land sales and involuntary conversions		24,956		19,236
Installment sales		83,275		83,268
Pension Plan assets transferred to the 401(k) plan		580		872
Other		1,431		1,409
Total gross deferred tax liabilities		114,242		107,143
Net deferred tax liabilities	$	(52,808)	$	(44,315)

As of December 31, 2019 and 2018, the Company had state net operating loss carryforwards of $341.4 million and $357.0 million, respectively and no federal net operating loss carryforwards. The majority of state net operating losses are available to offset future taxable income through 2036 and will begin expiring in 2029. As of December 31, 2017, the Company had a federal income tax receivable of $8.4 million related to the reclassification of a U.S. federal AMT credit carryforward following the enactment of the Tax Act in December 2017, which is refundable to the Company in the years 2018 through 2021. During the year ended December 31, 2018, the U.S. federal AMT credit receivable decreased $4.5 million to $3.9 million due to the utilization in 2018. During the year ended December 31, 2019 the U.S. federal AMT credit receivable decreased $1.1 million to $2.8 million due to the expected utilization in 2019.

The Tax Act was enacted on December 22, 2017, and changed many aspects of U.S. corporate income taxation including reducing the U.S. federal corporate tax rate from 35% to 21% for tax years beginning after December 31, 2017. The Company recognized the tax effects of the Tax Act during the year ended December 31, 2017, which included a $33.5 million income tax benefit from the reassessment of net deferred tax balances to reflect the newly enacted tax rate.

On September 12, 2019, the Florida Department of Revenue announced that the corporate income tax rate for tax years 2019, 2020, and 2021 was reduced from 5.5% to 4.458%. As a result, the Company has recorded $1.0 million of income tax expense during 2019 to adjust its deferred tax balances due to the impact on the Company’s existing Florida net operating loss carried forward in addition to other temporary differences.

In general, a valuation allowance is recorded if, based on the available evidence, it is more likely than not that some portion or all of the deferred tax asset will not be realized. Realization of the Company’s deferred tax assets is dependent upon the Company generating sufficient taxable income in future years in the appropriate tax jurisdictions to obtain a benefit from the reversal of deductible temporary differences and from loss carryforwards. In 2018, the Company reassessed its need for a valuation allowance by evaluating all available evidence, including but not limited to historical and projected pre-tax profits. Based on this assessment the Company determined it had the ability to fully realize the future benefit of its net operating loss carryforward and released the valuation allowance in full resulting in a $5.0 million tax benefit in 2018.

Significant judgment is required in evaluating the Company's uncertain tax positions and determining its provision for income taxes. The Company regularly assesses the likelihood of adverse outcomes resulting from potential examinations to determine the adequacy of its provision for income taxes and applies a “more-likely-than-not” in determining the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company has not identified any unrecognized tax benefits as of December 31, 2019 and 2018. The Company had approximately $2.1 million of total unrecognized tax benefits as of December 31, 2017. During 2018, the Company recognized a $2.1 million income tax benefit due to the expiration of the statute of limitations for the tax year covering the previously unrecognized tax benefits. There were no penalties required to be accrued as of December 31, 2019 and 2018. The Company records interest related to unrecognized tax benefits, if any, in interest expense and penalties in other income, net.

The Company is currently open to examination by taxing authorities for the years ended December 31, 2016 through 2018. The IRS has completed a limited scope review of the Company’s tax returns for 2016 without adjustment.

Accumulated Other Comprehensive Loss

12 Months Ended

Dec. 31, 2019

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

15. Accumulated Other Comprehensive Loss

Following is a summary of the changes in the balances of accumulated other comprehensive loss, which is presented net of tax:


	Unrealized (Loss) and		Unrealized Loss
	Gain on Available-for-		Cash Flow
	Sale Securities		Hedge		Total
Accumulated other comprehensive loss at December 31, 2017	$	(1,461)	$	—	$	(1,461)
Other comprehensive loss before reclassifications		(2,127)		—		(2,127)
Amounts reclassified from accumulated other comprehensive loss		2,914		—		2,914
Other comprehensive income		787		—		787
Accumulated other comprehensive loss at December 31, 2018	$	(674)	$	—	$	(674)
Other comprehensive income (loss) before reclassifications		642		(251)		391
Amounts reclassified from accumulated other comprehensive loss		(52)		—		(52)
Other comprehensive income (loss)		590		(251)		339
Accumulated other comprehensive loss at December 31, 2019	$	(84)	$	(251)	$	(335)

Following is a summary of the tax effects allocated to other comprehensive income (loss):


	Year Ended December 31, 2019
	Before-		Tax (Expense) or		Net-of-
	Tax Amount		Benefit		Tax Amount
Unrealized gain on available-for-sale investments	$	842	$	(214)	$	628
Unrealized gain on restricted investments		18		(4)		14
Interest rate swap		(336)		85		(251)
Reclassification adjustment for net gain included in earnings		(69)		17		(52)
Net unrealized gain		455		(116)		339
Other comprehensive income	$	455	$	(116)	$	339


	Year Ended December 31, 2018
	Before-		Tax Benefit or		Net-of-
	Tax Amount		(Expense)		Tax Amount
Unrealized loss on available-for-sale investments	$	(2,845)	$	723	$	(2,122)
Unrealized loss on restricted investments		(6)		2		(4)
Reclassification adjustment for net loss included in earnings		1,061		(269)		792
Reclassification adjustment for other-than-temporary impairment loss included in earnings		2,330		(592)		1,738
Reclassification into retained earnings for the adoption of ASU 2016-01 (1)		932		(236)		696
Reclassification into retained earnings for the adoption of ASU 2018-02 (2)		—		(313)		(313)
Net unrealized gain		1,472		(685)		787
Other comprehensive income	$	1,472	$	(685)	$	787

(1)

The reclassification into retained earnings relates to the adoption of ASU 2016-01. The new guidance was effective January 1, 2018, and required equity investments to be measured at fair value with changes in fair value recognized in results of operations rather than the consolidated statements of comprehensive income.

(2)

The reclassification into retained earnings relates to the adoption of ASU 2018-02. The new guidance was effective January 1, 2018, and allowed a reclassification from accumulated other comprehensive loss to retained earnings for stranded tax effects resulting from the Tax Act.

Stockholders' Equity	12 Months Ended
Stockholders' Equity	Dec. 31, 2019
Stockholders’ Equity
Stockholders' Equity	16. Stockholders’ Equity Stock Repurchase Program The Company’s Board has approved a Stock Repurchase Program pursuant to which the Company is authorized to repurchase shares of its common stock. The Stock Repurchase Program has no expiration date. During the years ended December 31, 2019 and 2018, the Company repurchased 1,263,159 and 5,238,566 shares, respectively, of its common stock at an average purchase price of $16.59 and $17.82, per share, respectively, for an aggregate purchase price of $20.8 million and $93.4 million, respectively, pursuant to its Stock Repurchase Program. As of August 15, 2019, the Company had a total authority of $35.8 million available for purchase of shares of its common stock pursuant to its previously announced Stock Repurchase Program. On August 15, 2019, the Company’s Board authorized additional repurchase authority of up to $64.2 million of the Company’s shares of its common stock under the Stock Repurchase Program, bringing the total authorized repurchase authority to $100.0 million. As of December 31, 2019, the Company had a total authority of $86.2 million available for purchase of shares of its common stock pursuant to its Stock Repurchase Program. The Company may repurchase its common stock in open market purchases from time to time, in privately negotiated transactions or otherwise, pursuant to Rule 10b‑18 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The timing and amount of any additional shares to be repurchased will depend upon a variety of factors, including market and business conditions and is subject to the Company maintaining $100.0 million of cash and cash equivalents. Repurchases may be commenced or suspended at any time or from time to time without prior notice. The Stock Repurchase Program will continue until otherwise modified or terminated by the Company’s Board at any time in its sole discretion. In December 2019, the Company retired 1,263,159 shares of treasury stock at a value of $20.8 million. In September 2018, the Company retired 5,238,566 shares of treasury stock at a value of $93.4 million. Issuance of Common Stock for Director’s Fees On May 20, 2019, the Company’s Board approved granting to each non-employee director an equity grant with an aggregate fair market value of $50,000 or, at the director’s election, its cash equivalent. On July 1, 2019, 5,708 shares of restricted stock were granted to two of the Company’s directors pursuant to the Board’s May 20, 2019 approval and the Company’s 2015 Performance and Equity Incentive Plan (the “2015 Plan”). This restricted stock will vest on the date of the Company’s 2020 Annual Meeting of Shareholders. Two non-employee directors elected to receive cash in lieu of the stock, which was paid in July 2019. On May 23, 2018, the Company’s Board approved granting to each non-employee director an equity grant with an aggregate fair market value of $50,000 or, at the director’s election, its cash equivalent. On July 2, 2018, 2,778 shares of restricted stock were granted to one of the Company’s directors pursuant to the Board’s May 23, 2018 approval and the Company’s 2015 Plan. This restricted stock vested on May 20, 2019, the date of the Company’s 2019 Annual Meeting of Shareholders. Three non-employee directors elected to receive cash in lieu of the stock. On May 25, 2017, the Company’s Board approved granting to each non-employee director an equity grant with an aggregate fair market value of $50,000 or, at the director’s election, its cash equivalent. On July 3, 2017, 5,334 shares of restricted stock were granted to two of the Company’s directors pursuant to the Board’s May 25, 2017 approval and the Company’s 2015 Plan. This restricted stock vested on May 23, 2018, the date of the Company’s 2018 Annual Meeting of Shareholders. Four non-employee directors elected to receive cash in lieu of the stock. On May 17, 2016, the Board approved the issuance of 8,919 restricted stock awards to three members of the Board as part of their 2016 compensation package and pursuant to the 2015 Plan. These restricted stock awards vested 25% on the date of issue and 25% on August 17, 2016, November 17, 2016, and February 17, 2017. For each of the years ended December 31, 2019, 2018 and 2017, the Company recorded expense of $0.1 million, related to restricted stock awards to the Company’s directors. Issuance of Common Stock for Officer Compensation Pursuant to the Company’s 2015 Plan, the Company’s named executive officers (“NEOs”) were provided with the opportunity to elect to receive up to 50% of their discretionary cash incentive award for 2017 performance in shares of Company stock and four of the Company’s NEOs elected to do so. On March 15, 2018, 9,956 shares, net of shares withheld for taxes, of restricted stock were granted to four of the Company’s NEOs. The restricted stock vested immediately. For the year ended December 31, 2018, the Company recorded expense of $0.2 million related to restricted stock awards to the Company’s NEOs.

Stock Based Compensation

12 Months Ended

Dec. 31, 2019

Stock Based Compensation

Stock Based Compensation

17. Stock Based Compensation

The Company’s 2015 Performance and Equity Incentive Plan offers a stock incentive plan whereby awards are granted to certain employees and non-employee directors of the Company in various forms including restricted shares of Company common stock and options to purchase Company common stock. Awards are discretionary and determined by the Compensation Committee of the Board. Stock based compensation cost is measured at the grant date based on the fair value of the award and is typically recognized as expense on a straight-line basis over the requisite service period, which is the vesting period. As of December 31, 2019, 1,463,543 shares were available for awards under the 2015 Plan.

Total stock-based compensation recorded in other operating and corporate expenses on the consolidated statements of income is as follows:


	Year Ended December 31,
	2019		2018		2017
Stock compensation expense before tax benefit	$	77	$	71	$	76
Income tax benefit		(19)		(19)		(22)
	$	58	$	52	$	54

In 2019, 2018 and 2017, the Company granted 5,708, 2,778 and 5,334 shares, respectively, of restricted stock awards to certain of the Company’s directors as fees for services rendered under the 2015 Plan, of which 2,778, 5,334 and 2,229 vested during the years ended December 31, 2019, 2018 and 2017, respectively. As of December 31, 2019, the Company had 5,708 unvested restricted stock units outstanding, which will vest in May 2020. The weighted average grant date fair value of restricted stock units during 2019, 2018 and 2017 were $17.52, $18.00 and $18.75, respectively. The total fair values of restricted stock units that vested were $0.1 million during each 2019, 2018 and 2017.

In 2018, the Company granted 9,956 shares, net of shares withheld for taxes, of restricted stock awards to certain of the Company’s NEO’s as their discretionary cash incentive award for 2017 performance under the 2015 Plan, of which all vested during the year ended December 31, 2018. The weighted average grant date fair value of the restricted stock units granted to the Company’s NEO’s during 2018 was $19.32. The total fair value of restricted stock units related to restricted stock awards to the Company’s NEO’s that vested were $0.2 million during 2018.

Employee Benefit Plan	12 Months Ended
Employee Benefit Plan	Dec. 31, 2019
Employee Benefit Plan
Employee Benefit Plan	18. Employee Benefit Plan The Company maintains a 401(k) retirement plan covering substantially all officers and employees of the Company, which permits participants to defer up to the maximum allowable amount determined by the IRS of their eligible compensation. As part of the Pension Plan termination in 2014, the Company directed the Pension Plan to transfer $7.9 million of the Pension Plan’s surplus assets into a suspense account in the Company’s 401(k) plan. The Company has retained the risks and rewards of ownership of these assets; therefore, the assets held in the suspense account are included in the Company’s consolidated financial statements until they are allocated to participants. As of December 31, 2019 and 2018, the fair value of these assets was recorded in other assets on the Company’s consolidated balance sheets and were $2.4 million and $3.4 million, respectively. The Company expenses the fair value of the assets at the time the assets are allocated to participants, which is expected to be allocated up to the next two years. During both 2019 and 2018, the Company recorded an expense of $1.1 million and during 2017 the Company recorded an expense of $1.2 million, for the fair value of the assets, less expenses, that were allocated to participants. Any gain or loss on these assets is reflected in the Company’s consolidated statements of income and was less than a $0.1 million loss for the years ended December 31, 2019 and 2018 and less than a $0.1 million gain for the year ended December 31, 2017.

RiverTown Impact Fees	12 Months Ended
RiverTown Impact Fees	Dec. 31, 2019
RiverTown Impact Fees
RiverTown Impact Fees	19. RiverTown Impact Fees As part of the Company’s April 2014 RiverTown transaction, the buyer, an affiliate of Mattamy (Jacksonville) Partnership d/b/a Mattamy Homes (“Mattamy”), was obligated to pay certain impact fees to the Company prior to April 2, 2019 and, depending on circumstances, potentially thereafter. In June 2018, the Company received $23.1 million from Mattamy to pay the estimated impact fees based on Mattamy’s current development plans and the impact fee schedule in effect at the time of the payment. For the year ended December 31, 2018, the impact fees of $23.1 million were included in real estate revenue in the Company’s consolidated statements of income. Mattamy may be required to pay to the Company additional impact fees based on its future development plans. Any consideration the Company may receive for additional impact fees will be based on a variety of factors outside the Company’s control or ability to estimate, including impact fee increases or decreases by St. Johns County, home sizes and the number of homes built in the project. The Company received impact fees for a total of $1.3 million, $23.7 million and $0.9 million during 2019, 2018 and 2017, respectively.

Other Income (Expense)

12 Months Ended

Dec. 31, 2019

Other Income (Expense)

Other Income (Expense)

20. Other Income (Expense)

Other income (expense) consists of the following:



	Year Ended December 31,
	2019		2018		2017
Investment income, net
Interest and dividend income	$	7,375	$	9,060	$	16,380
Accretion income		84		684		1,983
Net realized gain (loss) on the sale of investments		87		(973)		10,750
Other-than-temporary impairment loss		—		(2,330)		(2,288)
Unrealized loss on investments, net		(5,342)		(3,035)		—
Interest income from investments in SPEs		8,190		8,197		8,201
Interest accrued on notes receivable and other interest		320		547		384
Total investment income, net		10,714		12,150		35,410
Interest expense
Interest expense and amortization of discount and issuance costs for Senior Notes issued by SPE		(8,801)		(8,788)		(8,777)
Other interest expense		(3,501)		(3,052)		(3,368)
Total interest expense		(12,302)		(11,840)		(12,145)
Sale of vacation rental management, net		—		—		9,800
Other income (expense), net
Gain on land contribution to equity method investment		2,317		—		—
Accretion income from retained interest investments		1,325		1,232		1,100
Gain on insurance recovery		5,314		7,199		—
Loss from hurricane damage		(2,704)		(8,628)		—
Miscellaneous income, net		198		1,349		3,613
Other income, net		6,450		1,152		4,713
Total other income, net	$	4,862	$	1,462	$	37,778

Investment Income, Net

Interest and dividend income includes interest income accrued or received on the Company’s corporate debt securities, commercial paper and money market funds, and dividend income received from the Company’s investment in preferred stock. Accretion income includes the amortization of the premium or accretion of discount related to the Company’s available-for-sale securities, which is amortized based on an effective interest rate method over the term of the available-for-sale securities. Net realized gain (loss) on the sale of investments include the gains or losses recognized on the sale of available-for-sale and equity securities prior to maturity. Other-than-temporary impairment loss includes impairments related to the Company’s corporate debt securities for the year ended December 31, 2018 and impairments related to the Company’s corporate debt securities and preferred stock investments for the year ended December 31, 2017.

Unrealized loss on investments, net includes unrealized gains or losses on investments – equity securities. Prior to 2018, unrealized gains or losses related to these investments were recorded in accumulated other comprehensive loss.

Interest income from investments in SPEs primarily includes interest earned on the investments held by Panama City Timber Finance Company, LLC, which is used to pay the interest expense for Senior Notes held by Northwest Florida Timber Finance, LLC.

Interest Expense

Interest expense includes interest incurred related to the Company’s CDD debt, Senior Notes issued by Northwest Florida Timber Finance, LLC, project financing and finance leases. Borrowing costs, including the discount and issuance costs for the Senior Notes issued by Northwest Florida Timber Finance, LLC, are amortized based on the effective interest method at an effective rate of 4.9%.

During 2019, 2018 and 2017 the Company capitalized $0.6 million, $0.2 million and less than $0.1 million, respectively, in interest related to projects under development. These amounts are included within investment in real estate, net on the Company’s consolidated balance sheets.

Sale of Vacation Rental Management, Net

Sale of vacation rental management, net includes a gain of $9.8 million from the PCR Rentals Sale in December 2017. See Note 8. Sale of Vacation Rental Management for further discussion.

Other Income, Net

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

Gain on land contribution to equity method investment for the year ended December 31, 2019 includes a gain of $0.8 million on land contributed to the Company’s unconsolidated Busy Bee JV and a gain of $1.5 million on land contributed to the Company’s unconsolidated Pier Park TPS JV. See Note 4. Real Estate Joint Ventures for additional information.

The Company records the accretion of investment income from its retained interest investment over the life of the retained interest using the effective yield method with rates ranging from 3.7% to 11.8%

During the year ended December 31, 2019 the company had a $5.3 million gain on insurance recovery and incurred $2.7 million of loss from hurricane damage related to Hurricane Michael. The year ended December 31, 2018 includes a $7.2 million gain on insurance recovery and $8.6 million of loss from hurricane damage, which includes $7.3 million for loss on disposal of assets related to damage and $1.3 million of expenses related to Hurricane Michael. See Note 7. Hurricane Michael for additional information.

Miscellaneous income, net for the year ended December 31, 2018 primarily consists of $2.2 million of income related to the final distribution from the Company’s unconsolidated JV ALP, offset by $0.6 million for a homeowners’ association settlement related to one of the Company’s residential communities. Miscellaneous income, net for the year ended December 31, 2017, includes an insurance settlement negotiated by the Company that resulted in proceeds of $3.5 million for reimbursement of certain attorney fees and related costs incurred by the Company.

Segment Information

12 Months Ended

Dec. 31, 2019

Segment Information

Segment Information

21. Segment Information

The Company currently conducts primarily all of its business in the following four operating segments: 1) residential real estate, 2) hospitality, 3) commercial leasing and sales and 4) forestry.

The Company’s reportable segments are strategic business units that offer different products and services. They are each managed separately and decisions about allocations of resources are determined by management based on these strategic business units.

The Company uses income before equity in loss from unconsolidated affiliates, income taxes and non-controlling interest, cash flows and other measures for purposes of making decisions about allocating resources to each segment and assessing each segment’s performance, which the Company believes represents current performance measures.

The accounting policies of the segments are the same as those described herein. Total revenue represents sales to unaffiliated customers, as reported in the Company’s consolidated statements of income. All significant intercompany transactions have been eliminated in consolidation. The caption entitled “Other” consists of mitigation credit revenue, title fee revenue and corporate operating and general and administrative expenses, net of investment income.

Information by business segment is as follows:



	Year Ended December 31,
	2019		2018		2017
Operating revenue:
Residential real estate (a)	$	41,586	$	43,266	$	22,248
Hospitality		45,720		39,576		54,319
Commercial leasing and sales		22,458		16,485		14,510
Forestry revenue		16,365		8,135		8,443
Other (b)		956		2,814		518
Consolidated operating revenue	$	127,085	$	110,276	$	100,038

Cost of revenue:
Cost of residential real estate revenue	$	20,492	$	10,215	$	12,971
Cost of hospitality revenue		33,924		33,385		47,300
Cost of commercial leasing and sales revenue		8,549		6,397		5,979
Cost of forestry revenue		1,044		1,097		903
Cost of other revenue		77		223		41
Consolidated cost of revenue	$	64,086	$	51,317	$	67,194

Other operating and corporate expenses:
Residential real estate	$	4,873	$	4,717	$	4,329
Hospitality		838		533		462
Commercial leasing and sales		3,052		3,183		3,444
Forestry		427		384		396
Other		12,199		11,740		11,751
Consolidated other operating and corporate expenses	$	21,389	$	20,557	$	20,382

Depreciation, depletion and amortization:
Residential real estate	$	283	$	288	$	363
Hospitality		4,579		3,640		4,049
Commercial leasing and sales		4,939		4,411		3,729
Forestry		314		514		575
Other		172		145		169
Consolidated depreciation, depletion and amortization	$	10,287	$	8,998	$	8,885

Investment income, net:
Residential real estate and other	$	184	$	320	$	89
Corporate (c)		10,530		11,830		35,321
Consolidated investment income, net	$	10,714	$	12,150	$	35,410

Interest expense:
Residential real estate	$	717	$	867	$	1,164
Commercial leasing and sales		2,739		2,180		2,200
Corporate and other (d)		8,846		8,793		8,781
Consolidated interest expense	$	12,302	$	11,840	$	12,145

Sale of vacation rental management, net:
Hospitality (e)	$	—	$	—	$	9,800
Consolidated sale of vacation rental management, net	$	—	$	—	$	9,800

Income (loss) before equity in loss from unconsolidated affiliates and income taxes:
Residential real estate (a)	$	15,144	$	26,919	$	3,683
Hospitality		6,574		1,817		12,664
Commercial leasing and sales		6,632		(121)		(836)
Forestry		14,607		6,222		6,586
Other		(6,772)		(3,971)		19,258
Consolidated income before equity in loss from unconsolidated affiliates and income taxes	$	36,185	$	30,866	$	41,355

Equity in loss from unconsolidated affiliates
Residential real estate	$	(71)	$	—	$	—
Commercial leasing and sales		(6)		—		—
Consolidated equity in loss from unconsolidated affiliates	$	(77)	$	—	$	—

Capital expenditures:
Residential real estate	$	28,639	$	15,865	$	8,407
Hospitality		15,923		7,400		4,918
Commercial leasing and sales		67,254		20,483		25,248
Forestry		1,965		1,069		1,100
Other		505		379		207
Total capital expenditures	$	114,286	$	45,196	$	39,880


	December 31,		December 31,
	2019		2018
Total assets:
Residential real estate	$	139,349	$	127,999
Hospitality		89,570		68,389
Commercial leasing and sales		232,715		182,658
Forestry		21,221		20,189
Other		426,378		471,727
Total assets	$	909,233	$	870,962

(a)

Includes revenue of $23.1 million in 2018 for a one-time receipt of RiverTown impact fees related to the 2014 RiverTown transaction. See Note 19. RiverTown Impact Fees.

(b)

Includes revenue of $2.2 million in 2018 related to a specific sale of mitigation bank credits.

(c)

Includes interest income from investments in SPEs of $8.2 million in each 2019, 2018 and 2017.

(d)

Includes interest expense from Senior Notes issued by SPE of $8.8 million in each 2019, 2018 and 2017.

(e)

Includes a net gain of $9.8 million from the PCR Rentals sale in 2017. See Note 8. Sale of Vacation Rental Management.

Commitments and Contingencies	12 Months Ended
Commitments and Contingencies	Dec. 31, 2019
Commitments and Contingencies
Commitments and Contingencies	22. Commitments and Contingencies The Company establishes an accrued liability when it is both probable that a material loss has been incurred and the amount of the loss can be reasonably estimated. The Company will evaluate the range of reasonably estimated losses and record an accrued liability based on what it believes to be the minimum amount in the range, unless it believes an amount within the range is a better estimate than any other amount. In such cases, there may be an exposure to loss in excess of the amounts accrued. The Company evaluates quarterly whether further developments could affect the amount of the accrued liability previously established or would make a loss contingency both probable and reasonably estimable. The Company also provides disclosure when it believes it is reasonably possible that a material loss will be incurred or when it believes it is reasonably possible that the amount of a loss will exceed the recorded liability. The Company reviews loss contingencies at least quarterly to determine whether the likelihood of loss has changed and to assess whether a reasonable estimate of the loss or range of loss can be made. This estimated range of possible losses is based upon currently available information and is subject to significant judgment and a variety of assumptions, as well as known and unknown uncertainties. The matters underlying the estimated range will change from time to time, and actual results may vary significantly from the current estimate. The Company is subject to a variety of litigation, claims, other disputes and governmental proceedings that arise from time to time in the ordinary course of its business, including litigation related to its prior homebuilding and development activities. The Company cannot make assurances that it will be successful in defending these matters. Based on current knowledge, the Company does not believe that loss contingencies arising from pending litigation, claims, other disputes and governmental proceedings, including those described herein, will have a material adverse effect on the consolidated financial position or liquidity of the Company. However, in light of the inherent uncertainties involved in these matters, an adverse outcome in one or more of these matters could be material to the Company’s results of operations or cash flows for any particular reporting period. The Company is subject to costs arising out of environmental laws and regulations, which include obligations to remove or limit the effects on the environment of the disposal or release of certain wastes or substances at various sites, including sites that have been previously sold. It is the Company’s policy to accrue and charge against earnings environmental cleanup costs when it is probable that a liability has been incurred or range of loss can be reasonably estimated. As assessments and cleanups proceed, these accruals are reviewed and adjusted, if necessary, as additional information becomes available. The Company is in the process of assessing certain properties in regard to the effects, if any, on the environment from the disposal or release of wastes or substances. Management is unable to quantify future rehabilitation costs above present accruals at this time or provide a reasonably estimated range of loss. Other litigation, claims, disputes and governmental proceedings, including environmental matters, are pending against the Company. Accrued aggregate liabilities related to the matters described above and other litigation matters were $1.5 million and $1.2 million as of December 31, 2019 and 2018, respectively. Significant judgment is required in both the determination of probability and the determination as to whether the amount of an exposure is reasonably estimable. Due to uncertainties related to these matters, accruals are based only on the information available at that time. As additional information becomes available, management reassesses potential liabilities related to pending claims and litigation and may revise its previous estimates, which could materially affect the Company’s results of operations for any particular reporting period. The Company has retained certain self-insurance risks with respect to losses for third party liability and property damage, including its timber assets. As of December 31, 2019 and 2018, the Company was required to provide surety bonds that guarantee completion of certain infrastructure in certain development projects and mitigation banks of $10.7 million and $9.4 million, respectively, which may potentially result in liability to the Company if certain obligations of the Company are not met. As of December 31, 2019, the Company had a total of $98.8 million in construction and development related contractual obligations, of which a significant portion will be funded through committed financing arrangements. In January 2019, the Company’s unconsolidated Pier Park TPS JV, entered into a $14.4 million loan, maturing in January 2026. The Pier Park TPS JV Loan is secured by the real property, assignment of rents and the security interest in the rents and personal property. In connection with the Pier Park TPS JV Loan, as guarantor the Company, a wholly owned subsidiary of the Company and the Company’s JV partner entered into a joint and several guarantee in favor of the lender, to guarantee the payment and performance of the borrower. As guarantor the Company’s liability under the Pier Park TPS JV Loan will be automatically reduced to 50.0%, or a further 25.0% of the outstanding principal balance upon reaching and maintaining certain debt service coverage. 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 or warranties to be performed on the part of such guarantor; any sale, conveyance or transfer of the property; upon the filing or commencement of voluntary bankruptcy or insolvency proceedings; the entry of monetary judgement or assessment or the filing of any tax lien against either the borrower or guarantor; and the dissolution of the borrower or guarantor. As of December 31, 2019, $6.8 million was outstanding on the Pier Park TPS JV Loan. In November 2019, the Company’s unconsolidated Busy Bee JV, entered into a $5.4 million construction loan maturing in November 2035 and a $1.2 million equipment loan maturing in November 2027. The loans are secured by the real and personal property, assignment of rents and leases and a security interest in the construction contract and management agreement. In connection with the Busy Bee JV Construction Loan and the Busy Bee JV Equipment Loan, as guarantor the Company, a wholly owned subsidiary of the Company and the Company’s JV partner entered into a joint and several guarantee in favor of the lender, to guarantee the payment and performance of the borrower through substantial completion. As guarantor, the Company’s liability under the loans upon substantial completion will be reduced to 50.0% for a twelve month period. Subsequent to that time, the Company’s guarantee will be released upon request. Upon release of the Company’s guarantee, the JV partner will be the sole guarantor and will receive a fee related to the guarantee from the Company based on the Company’s ownership percentage. As of December 31, 2019, $1.4 million was outstanding on the Busy Bee JV Construction Loan and less than $0.1 million was outstanding on the Busy Bee JV Equipment Loan. The Company has assessed the need to record a liability for the guarantees related to the Company’s unconsolidated JVs and did not record an obligation as of December 31, 2019. As part of certain sales of timberlands in 2007, 2008 and 2014, the Company generated significant tax gains. The installment notes structure allowed the Company to defer the resulting federal tax liability of $33.7 million until 2022 - 2023 and $37.8 million until 2029, respectively, the maturity dates for the installment notes. The Company has a deferred tax liability related to the gains in connection with these sales.

Quarterly Financial Data (unaudited)

12 Months Ended

Dec. 31, 2019

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (unaudited)

23. Quarterly Financial Data (unaudited)


	Quarters Ended
	December 31,		September 30,		June 30,		March 31,
2019
Operating revenue	$	42,660	$	32,856	$	35,546	$	16,023
Operating income (loss)	$	15,196	$	7,420	$	10,868	$	(2,161)
Net income attributable to the Company	$	8,688	$	5,717	$	10,373	$	1,997
Basic and diluted income per share attributable to the Company (1)	$	0.15	$	0.10	$	0.17	$	0.03
2018
Operating revenue (2)	$	16,301	$	23,676	$	50,434	$	19,865
Operating (loss) income (2)	$	(1,343)	$	1,944	$	29,344	$	(541)
Net (loss) income attributable to the Company	$	(66)	$	5,483	$	26,195	$	757
Basic and diluted income per share attributable to the Company (1)	$	—	$	0.09	$	0.41	$	0.01

(1)

Quarterly and year-to-date computations of per share amounts are made independently. Therefore, the sum of per share amounts for the quarters may not be consistent with the per share amounts for the year.

(2)

The quarter ended June 30, 2018 includes revenue of $23.1 million in 2018 for a one-time receipt of RiverTown impact fees related to the 2014 RiverTown transaction. See Note 19. RiverTown Impact Fees.

Schedule III (Consolidated) - Real Estate and Accumulated Depreciation

12 Months Ended

Dec. 31, 2019

SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract]

SCHEDULE III (CONSOLIDATED) - REAL ESTATE AND ACCUMULATED DEPRECIATION

THE ST. JOE COMPANY

SCHEDULE III (CONSOLIDATED) - REAL ESTATE AND ACCUMULATED DEPRECIATION

DECEMBER 31, 2019

(in thousands)


			Initial Cost to Company (2)						Gross Amount at December 31, 2019
							Costs Capitalized
							Subsequent to								Accumulated		Date of	Depreciation
			Land &		Buildings &		Acquisition or		Land & Land		Buildings and				Depreciation and		Construction or	Life
Description (1)	Encumbrances		Improvements		Improvements		Construction (3)		Improvements		Improvements		Total		Amortization		Acquisition	(In Years)
Residential developments	$	2,362	$	45,445	$	13,595	$	68,329	$	121,268	$	6,101	$	127,369	$	4,542	through 2019	5-25
Hospitality
WaterColor Inn		—		2,362		15,149		9,303		2,832		23,982		26,814		10,409	2002, 2013, 2018-2019	10 - 40
Pier Park Hospitality		2,637		—		—		7,139		7,139		—		7,139		—	2019	N/A
Clubs and golf courses		—		34,608		20,132		3,799		39,638		18,901		58,539		22,031	2001 - 2007, 2018-2019	10 - 25
Marinas		—		5,350		2,652		443		5,784		2,661		8,445		1,651	2006 - 2007, 2019	10 - 25
Other		1,574		—		5,470		660		572		5,558		6,130		2,131	2008 - 2009, 2019	10 - 30
Commercial leasing and sales
Leasing properties:
Pier Park North		45,134		13,711		35,243		3,115		13,711		38,358		52,069		9,364	2014 - 2017	15 - 39
Town centers		—		713		21,887		(2,136)		789		19,675		20,464		15,974	2001 - 2008	10 - 25
VentureCrossings		—		5,792		24,490		3,486		9,828		23,940		33,768		4,330	2012, 2017, 2019	10 - 39
Watersound Origins Crossings		2,414		21		—		7,584		7,605		—		7,605		—	2019	N/A
Pier Park Crossings		33,523		6,886		22,501		4,823		11,708		22,502		34,210		317	2018-2019	20-39
Pier Park Crossings Phase II		—		361		—		1,820		2,181		—		2,181		—	2019	N/A
Watercrest		—		894		—		8,724		9,618		—		9,618		—	2019	N/A
Other		2,907		3,540		11,057		14,343		17,712		11,228		28,940		1,355	through 2019	10 - 39
Commercial developments		1,978		34,816		—		21,175		55,991		—		55,991		73	through 2019	5
Timberlands		—		6,627		1,806		12,755		19,382		1,806		21,188		2,045	n/a	5 - 30
Unimproved land		—		85		—		4,477		4,562		—		4,562		34	n/a	15 - 20
Total	$	92,529	$	161,211	$	173,982	$	169,839	$	330,320	$	174,712	$	505,032	$	74,256

(1)

Substantially all real estate properties are located in Northwest Florida.

(2)

Includes initial costs to the Company to place the assets in service.

(3)

Includes cumulative impairments.

Notes:

(A)

The aggregate cost of real estate owned at December 31, 2019 for federal income tax purposes is approximately $503.8 million.

(B)

Reconciliation of real estate owned (in thousands of dollars):


	December 31,		December 31,		December 31,
	2019		2018		2017
Balance at beginning of the year	$	418,494	$	404,376	$	381,969
Amounts capitalized		109,699		43,306		39,261
Impairments		—		(99)		(714)
Cost of real estate sold		(23,608)		(18,928)		(14,274)
Amounts retired or adjusted		447		(10,161)		(1,866)
Balance at the end of the year	$	505,032	$	418,494	$	404,376

(C)

Reconciliation of accumulated depreciation (in thousands of dollars):


	December 31,		December 31,		December 31,
	2019		2018		2017
Balance at beginning of the year	$	67,500	$	71,752	$	67,349
Depreciation expense		6,756		6,018		6,245
Amounts retired or adjusted		—		(10,270)		(1,842)
Balance at the end of the year	$	74,256	$	67,500	$	71,752

Schedule IV (Consolidated) - Mortgage Loans on Real Estate

12 Months Ended

Dec. 31, 2019

Mortgage Loans on Real Estate [Abstract]

SCHEDULE IV (CONSOLIDATED) - MORTGAGE LOANS ON REAL ESTATE

THE ST. JOE COMPANY

SCHEDULE IV (CONSOLIDATED) - MORTGAGE LOANS ON REAL ESTATE

DECEMBER 31, 2019

(in thousands)


										Principal Amount of
			Periodic		Face		Carrying			Loans Subject to
			Payment		Amount of		Amount of			Delinquent Principal
Description (a)	Interest Rate	Final Maturity Date	Terms	Prior Liens	Mortgages		Mortgages			or Interest
Seller financing, residential homesites	5.5%	June 2021	P&I(b)	—	$	1,514	$	1,514	$	—
Seller financing, residential homesites	5.5%	December 2021	P&I(b)	—		872		872		—
Seller financing, residential homesites	5.5%	June 2020	P&I(c)	—		84		84		—
Seller financing, residential homesites	6.3%	March 2020	P&I(d)	—		128		128		128
Various other seller financing, rural land	6.4% to 6.5%	December 2022 through November 2023	P&I(e)	—		85		85		—
Total(f)					$	2,683	$	2,683	$	128

(a)

All seller financed properties are located in Northwest Florida.

(b)

Interest is paid quarterly over a twenty year amortization schedule. On the maturity date, all outstanding principal, all accrued interest and any other customary charges shall be due and payable in full.

(c)

Annual principal payment of $0.1 million due and interest is paid quarterly over a twenty year amortization schedule. On the maturity date, all outstanding principal, all accrued interest and any other customary charges shall be due and payable in full.

(d)

Annual principal payment of $0.1 million due and interest is accrued over a twenty year amortization schedule. On the maturity date, all outstanding principal, all accrued interest and any other customary charges shall be due and payable in full.

(e)

Principal and interest is paid monthly.

(f)

The aggregate cost for federal income tax purposes approximates the amount of unpaid principal.

The summarized changes in the carrying amount of mortgage loans are as follows:


	December 31,		December 31,		December 31,
	2019		2018		2017
Balance at beginning of the year	$	1,462	$	2,995	$	242
Additions during the year - new mortgage loans		2,386		1,471		2,821
Deductions during the year:
Collections of principal		1,165		3,004		68
Foreclosures		—		—		—
Balance at the end of the year	$	2,683	$	1,462	$	2,995

Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

Use of Estimates

Investment in Real Estate

Depreciation for operating property is computed on the straight-line method over the estimated economic lives of the assets, as follows:


		Estimated Useful
		Life (in years)
Land		N/A
Land improvements		15 - 20
Buildings		20-40
Building improvements		5-25
Timber		N/A