SEC Filing | The St. Joe Company

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 1-10466

The St. Joe Company

(Exact name of registrant as specified in its charter)


Florida	59-0432511
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

130 Richard Jackson Boulevard, Suite 200
Panama City Beach, Florida	32407
(Address of principal executive offices)	(Zip Code)

(850) 231-6400

(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Exchange on Which Registered
Common Stock, no par value	JOE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☑ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☑ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☑

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☑

As of April 26, 2021, there were 58,882,549 shares of common stock, no par value, outstanding.

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THE ST. JOE COMPANY

INDEX


	Page No.
PART I
Item 1. Financial Statements (Unaudited)	3
Condensed Consolidated Balance Sheets - March 31, 2021 and December 31, 2020	3
Condensed Consolidated Statements of Operations - Three Months Ended March 31, 2021 and 2020	5
Condensed Consolidated Statements of Comprehensive Income (Loss) - Three Months Ended March 31, 2021 and 2020	6
Condensed Consolidated Statements of Changes in Stockholders’ Equity - Three Months Ended March 31, 2021 and 2020	7
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, 2021 and 2020	8
Notes to the Condensed Consolidated Financial Statements	10
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3. Quantitative and Qualitative Disclosures About Market Risk	66
Item 4. Controls and Procedures	67
PART II
Item 1. Legal Proceedings	67
Item 1A. Risk Factors	68
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3. Defaults Upon Senior Securities	68
Item 4. Mine Safety Disclosures	68
Item 5. Other Information	68
Item 6. Exhibits	68
SIGNATURES	69

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)


	March 31,		December 31,
	2021		2020
ASSETS
Investment in real estate, net	$	569,201	$	551,653
Investment in unconsolidated joint ventures		40,776		37,965
Cash and cash equivalents		52,313		106,794
Investments - debt securities		93,973		48,051
Investments - equity securities		1,589		2,623
Other assets		62,315		63,243
Property and equipment, net of accumulated depreciation of $61,816 and $60,433 at March 31, 2021 and December 31, 2020, respectively		27,456		20,846
Investments held by special purpose entities		205,770		206,149
Total assets	$	1,053,393	$	1,037,324
LIABILITIES AND EQUITY
Liabilities:
Debt, net	$	169,730	$	158,915
Other liabilities		76,930		72,035
Deferred tax liabilities, net		61,272		60,915
Senior Notes held by special purpose entity		177,357		177,289
Total liabilities		485,289		469,154

Commitments and contingencies (Note 18)

Equity:
Common stock, no par value; 180,000,000 shares authorized; 58,882,549 issued and outstanding at March 31, 2021 and December 31, 2020		296,873		296,873
Retained earnings		253,701		255,216
Accumulated other comprehensive loss		(1,210)		(1,472)
Total stockholders’ equity		549,364		550,617
Non-controlling interest		18,740		17,553
Total equity		568,104		568,170
Total liabilities and equity	$	1,053,393	$	1,037,324

See accompanying notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

The following presents the portion of the condensed consolidated balances attributable to the Company’s consolidated variable interest entities, which, as of March 31, 2021 and December 31, 2020, include the Pier Park North joint venture (“Pier Park North JV”), Pier Park Crossings LLC (“Pier Park Crossings JV”), Origins Crossings, LLC (“Watersound Origins Crossings JV”), SJWCSL, LLC (“Watercrest JV”), Watersound Closings & Escrow, LLC (“Watersound Closings JV”), Pier Park Crossings Phase II LLC (“Pier Park Crossings Phase II JV”), Pier Park Resort Hotel, LLC (“Pier Park Resort Hotel JV”), the 30A Greenway Hotel, LLC (“The Lodge 30A JV”), Panama City Timber Finance Company, LLC and Northwest Florida Timber Finance, LLC as discussed in Note 2. Summary of Significant Accounting Policies. Basis of Presentation and Principles of Consolidation. The following assets may only be used to settle obligations of the consolidated variable interest entities and the following liabilities are only obligations of the variable interest entities and do not have recourse to the general credit of the Company, except for covenants and guarantees discussed in Note 10. Debt, Net.


	March 31,		December 31,
	2021		2020
ASSETS
Investment in real estate	$	170,550	$	170,853
Cash and cash equivalents		6,957		2,639
Other assets		18,119		13,821
Investments held by special purpose entities		205,770		206,149
Total assets	$	401,396	$	393,462
LIABILITIES
Debt, net	$	145,430	$	139,592
Other liabilities		7,356		9,596
Senior Notes held by special purpose entity		177,357		177,289
Total liabilities	$	330,143	$	326,477

See accompanying notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands except per share amounts)

(Unaudited)


	Three Months Ended
	March 31,
	2021		2020
Revenue:
Real estate revenue	$	21,053	$	5,808
Hospitality revenue		13,067		6,610
Leasing revenue		5,594		4,300
Timber revenue		1,591		1,856
Total revenue		41,305		18,574
Expenses:
Cost of real estate revenue		10,544		1,799
Cost of hospitality revenue		11,495		7,320
Cost of leasing revenue		2,664		612
Cost of timber revenue		141		179
Other operating and corporate expenses		7,069		6,916
Depreciation, depletion and amortization		3,853		3,073
Total expenses		35,766		19,899
Operating income (loss)		5,539		(1,325)
Other income (expense):
Investment income (loss), net		1,195		(1,609)
Interest expense		(3,671)		(3,345)
Gain on contribution to equity method investment		120		4,277
Other income, net		1,294		255
Total other expense, net		(1,062)		(422)
Income (loss) before equity in loss from unconsolidated affiliates and income taxes		4,477		(1,747)
Equity in loss from unconsolidated affiliates		(468)		(83)
Income tax (expense) benefit		(1,052)		495
Net income (loss)		2,957		(1,335)
Net loss (income) attributable to non-controlling interest		239		(198)
Net income (loss) attributable to the Company	$	3,196	$	(1,533)

NET INCOME (LOSS) PER SHARE
Basic and Diluted
Weighted average shares outstanding		58,882,549		59,375,618
Net income (loss) per share attributable to the Company	$	0.05	$	(0.03)

See accompanying notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2021		2020
Net income (loss):	$	2,957	$	(1,335)
Other comprehensive income (loss):
Net unrealized loss on available-for-sale investments		(2)		—
Net unrealized loss on restricted investments		—		(10)
Interest rate swap		157		(729)
Interest rate swap - unconsolidated affiliate		211		—
Reclassification of net realized gain included in earnings		(15)		(4)
Total before income taxes		351		(743)
Income tax (expense) benefit		(89)		188
Total other comprehensive income (loss), net of tax		262		(555)
Total comprehensive income (loss), net of tax		3,219		(1,890)
Total comprehensive loss (income) attributable to non-controlling interest		239		(198)
Total comprehensive income (loss) attributable to the Company	$	3,458	$	(2,088)

See accompanying notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in thousands)

(Unaudited)



	Common Stock						Accumulated Other
	Outstanding				Retained		Comprehensive		Treasury		Non-controlling
	Shares		Amount		Earnings		(Loss) Income		Stock		Interest		Total
Balance at December 31, 2020	58,882,549	$	296,873	$	255,216	$	(1,472)	$	—	$	17,553	$	568,170
Capital contribution from non-controlling interest	—		—		—		—		—		1,745		1,745
Capital distribution to non-controlling interest	—		—		—		—		—		(319)		(319)
Dividends ($0.08 per share)	—		—		(4,711)		—		—		—		(4,711)
Other comprehensive income, net of tax	—		—		—		262		—		—		262
Net income	—		—		3,196		—		—		(239)		2,957
Balance at March 31, 2021	58,882,549	$	296,873	$	253,701	$	(1,210)	$	—	$	18,740	$	568,104


	Common Stock						Accumulated Other
	Outstanding				Retained		Comprehensive		Treasury		Non-controlling
	Shares		Amount		Earnings		Loss		Stock		Interest		Total
Balance at December 31, 2019	59,414,583	$	305,631	$	214,225	$	(335)	$	—	$	10,149	$	529,670
Stock based compensation expense	—		27		—		—		—		—		27
Repurchase of common shares	(411,113)		—		—		—		(6,807)		—		(6,807)
Adoption of ASU 2016-13 Financial Instruments - Credit Losses, net of tax	—		—		(90)		—		—		—		(90)
Other comprehensive income, net of tax	—		—		—		(555)		—		—		(555)
Net loss	—		—		(1,533)		—		—		198		(1,335)
Balance at March 31, 2020	59,003,470	$	305,658	$	212,602	$	(890)	$	(6,807)	$	10,347	$	520,910

See accompanying notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Three Months Ended
	March 31,
	2021		2020
Cash flows from operating activities:
Net income (loss)	$	2,957	$	(1,335)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization		3,853		3,073
Stock based compensation		—		27
(Gain) loss on sale of investments		(17)		48
Unrealized loss on investments, net		1,049		4,761
Equity in loss from unconsolidated affiliates		468		83
Deferred income tax expense		268		935
Cost of real estate sold		9,839		1,593
Expenditures for and acquisition of real estate to be sold		(12,038)		(6,323)
Accretion income and other		(188)		(268)
Gain on contribution to equity method investment		(120)		(4,277)
Gain on insurance for damage to property and equipment, net		(866)		—
Changes in operating assets and liabilities:
Other assets		816		4,390
Other liabilities		3,807		1,408
Income taxes receivable		—		(998)
Net cash provided by operating activities		9,828		3,117
Cash flows from investing activities:
Expenditures for operating property		(24,319)		(32,974)
Expenditures for property and equipment		(803)		(1,476)
Proceeds from insurance claims		866		—
Purchases of investments - debt securities		(84,971)		(49,927)
Purchases of restricted investments		—		(12)
Maturities of investments - debt securities		39,000		—
Sales of investments - debt securities		36		—
Sales of investments - equity securities		9		2,502
Sales of restricted investments		1,173		1,208
Maturities of assets held by special purpose entities		416		415
Net cash used in investing activities		(68,593)		(80,264)
Cash flows from financing activities:
Capital contribution from non-controlling interests		1,745		—
Capital distribution to non-controlling interests		(319)		—
Capital contribution to unconsolidated affiliates		(2,500)		(600)
Repurchase of common shares		—		(6,807)
Dividends paid		(4,711)		—
Borrowings on debt		11,343		6,545
Principal payments for debt		(449)		(272)
Principal payments under finance lease obligation		(21)		(11)
Debt issuance costs		(540)		(193)
Net cash provided by (used in) financing activities		4,548		(1,338)
Net decrease in cash, cash equivalents and restricted cash		(54,217)		(78,485)
Cash, cash equivalents and restricted cash at beginning of the period		110,119		188,677
Cash, cash equivalents and restricted cash at end of the period	$	55,902	$	110,192

See accompanying notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

(Dollars in thousands)

(Unaudited)

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the amounts shown in the condensed consolidated statements of cash flows.



	March 31,		March 31,
	2021		2020
Cash and cash equivalents	$	52,313	$	106,427
Restricted cash included in other assets		3,589		3,765
Total cash, cash equivalents and restricted cash shown in the accompanying condensed consolidated statements of cash flows	$	55,902	$	110,192

Restricted cash includes amounts reserved as a requirement of financing and development for certain of the Company’s projects.


	Three Months Ended
	March 31,
		2021	2020
Cash paid during the period for:
Interest, net of amounts capitalized	$	5,207	$	5,110
Income taxes	$	—	$	—

Non-cash financing and investment activities:
Non-cash contribution to equity method investment	$	(574)	$	(5,476)
Decrease in Community Development District debt	$	(2)	$	(225)
Transfers of operating property to property and equipment	$	7,092	$	346
Decrease in expenditures for operating properties and property and equipment financed through accounts payable	$	(551)	$	(1,556)

See notes to the condensed consolidated financial statements.

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THE ST. JOE COMPANY

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands, unless otherwise stated)

(Unaudited)

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 86% of the Company’s real estate is located in Florida’s Bay, Gulf, and Walton counties. 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 three reportable segments: 1) residential, 2) hospitality and 3) commercial. See Note 17. Segment Information.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting on Form 10-Q. Accordingly, certain information and footnotes required by United States generally accepted accounting principles (“GAAP”) for complete financial statements are not included herein. The unaudited interim condensed 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 joint ventures (“JV”) 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. The December 31, 2020 condensed consolidated balance sheet amounts have been derived from the Company’s December 31, 2020 audited consolidated financial statements. Certain prior period amounts in the accompanying condensed 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 (loss). Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021.

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. Joint Ventures.

The unaudited interim condensed consolidated financial statements reflect all normal recurring adjustments that, in the opinion of management, are necessary for fair presentation of the information contained herein. The unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The Company adheres to the same accounting policies in preparation of its unaudited interim condensed consolidated financial statements as the Company’s December 31, 2020 annual financial statements, except for recently adopted accounting pronouncements detailed below. As required under GAAP, interim accounting for certain expenses, including income taxes, are based on full year assumptions. For interim financial reporting purposes, income taxes are recorded based upon estimated annual income tax rates.

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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.

On March 11, 2020, the World Health Organization characterized the outbreak of the novel coronavirus (“COVID-19”), as a global pandemic and recommended containment and mitigation measures. The economic conditions in the United States have been negatively impacted by the continued threat by the COVID-19 pandemic. The Company’s hospitality operations have already been, and may continue to be, disrupted by the impacts of the COVID-19 pandemic and the federal, state and local government actions to address it. While the breadth and duration of the COVID-19 pandemic impact is unknown, it could have a material adverse impact on the Company’s results of operations, cash flows and financial condition.

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, regional and national financial institutions, and as of March 31, 2021, these balances exceeded the amount of F.D.I.C. insurance provided on such deposits. In addition, as of March 31, 2021 the company had $16.0 million invested in short-term U.S. Treasury Bills classified as cash equivalents, $17.0 million invested in U.S. Treasury Money Market Funds, $94.0 million invested in U.S. Treasury Bills classified as investments – debt securities, and $1.6 million invested in two issuers of preferred stock that are non-investment grade.

Earnings Per Share

Basic and diluted earnings per share are calculated by dividing net income attributable to the Company by the weighted average number of common shares outstanding for the period. For the three months ended March 31, 2021 and 2020 the Company did not have any potential dilutive instruments, therefore, basic and diluted weighted average shares outstanding were equal.

Recently Adopted Accounting Pronouncements

Income Taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes - Simplifying the Accounting for Income Taxes 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 simplifies GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The Company adopted the new guidance as of January 1, 2021. The adoption of this guidance did not have an impact on the Company’s 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 Company adopted the new guidance as of January 1, 2021. The adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations and cash flows.

Codification Improvements

In October 2020, the FASB issued ASU 2020-10, Codification Improvements that improves consistency by including all disclosure guidance in the appropriate disclosure sections and clarifies application of various provisions in the Codification. The Company adopted the new guidance as of January 1, 2021. The adoption of this guidance did not

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have an impact on the Company’s financial condition, results of operations and cash flows and did not have a material impact on the disclosures to the financial statements.

Recently Issued Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting that provides temporary optional guidance to ease the potential burden in accounting for or recognizing the effects of reference rate reform on financial reporting. The new guidance provides expedients and exceptions for applying GAAP to contract modifications and hedging relationships affected by reference rate reform if certain criteria are met. The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate that is expected to be discontinued due to reference rate reform. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848) which clarifies the original guidance that certain optional expedients and exceptions in contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. This new guidance was effective upon issuance and may be applied prospectively through December 31, 2022, as reference rate activities occur. There is no current impact to the Company from this guidance and the Company is evaluating the impact that the adoption of this guidance will have on its financial condition, results of operations and cash flows.

3. Investment in Real Estate

Real estate by property type and segment includes the following:


	March 31,		December 31,
	2021		2020
Development property:
Residential	$	115,099	$	116,911
Hospitality		66,430		51,113
Commercial		98,352		123,389
Other		3,259		2,691
Total development property		283,140		294,104

Operating property:
Residential		13,253		13,254
Hospitality		105,046		103,687
Commercial		246,054		216,439
Other		129		129
Total operating property		364,482		333,509
Less: Accumulated depreciation		78,421		75,960
Total operating property, net		286,061		257,549
Investment in real estate, net	$	569,201	$	551,653

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, as well as development, construction and indirect costs. Residential development property includes residential communities such as Watersound Origins, SouthWood and WindMark Beach, as well as other communities. Hospitality development property consists of land, improvements and construction and development costs primarily related to the Pier Park Resort Hotel JV, Watersound Camp Creek club amenity, HomeWood Suites by Hilton hotel in Panama City Beach, Florida, The Lodge 30A JV hotel and a Hilton Garden Inn near the Northwest Florida Beaches International Airport, as well as other properties. Commercial development property primarily consists of land and construction and development costs for commercial, multi-family and industrial uses, including the Watersound Origins Crossings JV, Watersound Town Center, 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 segments will be reclassified as operating property as it is placed into service.

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

4. Joint Ventures

The Company enters into 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: (i) the power to direct the VIE activities that most significantly impact economic performance and (ii) 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. The Company, as lender, entered into a $10.0 million secured revolving promissory note with the unconsolidated Latitude Margaritaville Watersound JV as borrower. 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 9. Other Assets, Note 10. Debt, Net and Note 18. Commitments and Contingencies for additional information.

Consolidated Joint Ventures

The Lodge 30A JV

The Lodge 30A JV was created in July 2020, when the Company entered into a JV agreement to develop and operate a boutique hotel in Seagrove Beach, Florida. The JV parties are working together to develop and construct the 85 room hotel. The hotel is located on Scenic County Highway 30A on land that was contributed to the JV by the Company’s JV partner. As of March 31, 2021 and December 31, 2020, the Company owned a 52.8% interest in the consolidated JV. The Company’s partner is currently responsible for the construction activities of the JV, but once operational, a wholly-owned subsidiary of the Company will manage the day-to-day operations of the hotel. The Company has significant involvement in the project design and development and approves all major decisions, including annual budgets and financing. The Company determined The Lodge 30A JV is a VIE and that the Company is the VIE’s primary beneficiary as of March 31, 2021 and December 31, 2020.

Pier Park Resort Hotel JV

Pier Park Resort Hotel JV was created in April 2020, when the Company entered into a JV agreement to develop and operate an Embassy Suites hotel in Panama City Beach, Florida. The JV parties are working together to develop and construct a 255 room hotel. The hotel is located on land in the Pier Park area that was contributed to the JV by the Company. As of March 31, 2021 and December 31, 2020, the Company owned a 70.0% interest in the consolidated JV. The Company’s partner is currently responsible for the construction activities of the JV, but once operational, a wholly-owned subsidiary of the Company will manage the day-to-day operations of the hotel. The Company has significant involvement in the project design and development, annual budgets and financing. The Company determined Pier Park Resort Hotel JV is a VIE and that the Company is the VIE’s primary beneficiary as of March 31, 2021 and December 31, 2020.

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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. Construction of the 120 unit apartment community was completed in December 2020. The community is located on land in the Pier Park area that was contributed to the JV by the Company. As of March 31, 2021 and December 31, 2020, 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 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 March 31, 2021 and December 31, 2020.

Watersound Closings JV

Watersound Closings 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 March 31, 2021 and December 31, 2020, the Company owned a 58.0% interest in the consolidated JV. A wholly-owned subsidiary of the Company is the managing member of Watersound Closings JV and is responsible for the day-to-day activities of the business. 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 Watersound Closings JV is a VIE and that the Company is the VIE’s primary beneficiary as of March 31, 2021 and December 31, 2020.

Watercrest JV

Watercrest JV was created in May 2019, when the Company entered into a JV agreement to develop and operate a new senior living community in Santa Rosa Beach, Florida. Construction of the 107 unit community was completed in the fourth quarter of 2020. The community is located on land that was contributed to the JV by the Company. As of March 31, 2021 and December 31, 2020, the Company owned an 87.0% interest in the consolidated JV. A wholly-owned subsidiary of the Company’s JV partner is responsible for the day-to-day activities of the community. However, the Company 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 March 31, 2021 and December 31, 2020.

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 the remaining 163 units of the 217 unit apartment community. The community is located on land near the entrance to the Watersound Origins residential community, which was contributed to the JV by the Company. As of March 31, 2021 and December 31, 2020 the Company owned a 75.0% interest in the consolidated JV. A wholly-owned subsidiary of the Company’s JV partner is responsible for the day-to-day activities of the community. 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 March 31, 2021 and December 31, 2020.

Pier Park Crossings JV

Pier Park Crossings JV was created in April 2017, when the Company entered into a JV agreement to develop, manage and lease apartments in Panama City Beach, Florida. The 240 unit apartment community is located on land in the Pier Park area that was contributed to the JV by the Company. As of March 31, 2021 and December 31, 2020, the Company owned a 75.0% interest in the consolidated JV. A wholly-owned subsidiary of the Company’s JV partner is responsible for the day-to-day activities of the community. However, the Company 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 March 31, 2021 and December 31, 2020.

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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 March 31, 2021 and December 31, 2020, the Company owned a 60.0% interest in the consolidated JV. A wholly-owned subsidiary of the Company’s JV partner is responsible for the day-to-day activities of the retail center. However, the Company 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 March 31, 2021 and December 31, 2020.

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:


	March 31,		December 31,
	2021		2020
Investment in unconsolidated joint ventures
Latitude Margaritaville Watersound JV	$	26,714	$	24,288
Sea Sound Apartments JV		10,346		10,348
Pier Park TPS JV		2,314		2,149
Busy Bee JV		1,402		1,180
Total investment in unconsolidated joint ventures	$	40,776	$	37,965

Outstanding debt of unconsolidated JVs
Latitude Margaritaville Watersound JV^(a)	$	7,599	$	3,297
Sea Sound Apartments JV		15,648		8,789
Pier Park TPS JV		14,340		14,388
Busy Bee JV		6,539		6,614
Total outstanding debt of unconsolidated JVs^(b)	$	44,126	$	33,088

(a)	See Note 9. Other Assets for additional information on the $10.0 million secured revolving promissory note Company entered into with the unconsolidated Latitude Margaritaville Watersound JV.

(b)	See Note 18. Commitments and Contingencies for additional information.

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


		Three Months Ended March 31,
		2021