UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)



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

For the quarterly period ended March 31, ~~2016~~2017



¨	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 incorporation or organization)		(I.R.S. Employer Identification No.)

133 South ~~WaterSound~~Watersound Parkway ~~WaterSound,~~Watersound, Florida		~~32413~~32461
(Address of principal executive offices)		(Zip Code)

(850) 231-6400

(Registrant’s telephone number, including area code)

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 þ NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). YES þ NO ¨

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



Large accelerated filer	¨	Accelerated filer	þ

Non-accelerated filer	¨ (Do not check if a smaller reporting company)	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 þ

As of May ~~2, 2016,~~1, 2017, there were ~~74,333,907~~71,969,882 shares of common stock, no par value, outstanding.

~~Table of Contents~~

THE ST. JOE COMPANY

INDEX



	Page No.
PART I
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets - March 31, ~~2016~~2017 and December 31, ~~2015~~2016	3
Condensed Consolidated Statements of ~~Operations~~Income - Three Months Ended March 31, ~~2016~~2017 and ~~2015~~2016	5
Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ - Three Months Ended March 31, ~~2016~~2017 and ~~2015~~2016	6
Condensed Consolidated Statement of Changes in Stockholders’ Equity - Three Months Ended March 31, ~~2016~~2017	7
Condensed Consolidated Statements of Cash Flows - Three Months Ended March 31, ~~2016~~2017 and ~~2015~~2016	8
Notes to the Condensed Consolidated Financial Statements	10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	2932
Item 3. Quantitative and Qualitative Disclosures About Market Risk	4852
Item 4. Controls and Procedures	4852
PART II
Item 1. Legal Proceedings	4953
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4953
Item 6. Exhibits	5054
Signatures	5155

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)


	March 31, 2016			December 31, 2015			March 31, 2017			December 31, 2016
ASSETS
Investment in real estate, net	$	311,738		$	313,599		$	322,097		$	314,620
Cash and cash equivalents	201,325			212,773			216,982			241,111
Investments	193,537			191,240			175,623			175,725
Restricted investments	5,651			7,072			4,448			5,636
Notes receivable, net	2,491			2,555
Property and equipment, net of accumulated depreciation of $57.7 million and $57.1 million at March 31, 2016 and December 31, 2015, respectively	9,733			10,145
Income tax receivable							26,672			27,057
Claim settlement receivable	12,556			—			7,863			7,804
Other assets	33,540			36,573			36,473			38,410
Property and equipment, net of accumulated depreciation of $59.8 million and $59.4 million at March 31, 2017 and December 31, 2016, respectively							9,067			8,992
Investments held by special purpose entities	208,414			208,785			208,219			208,590
Total assets	$	978,985		$	982,742		$	1,007,444		$	1,027,945
LIABILITIES AND EQUITY
LIABILITIES:
Debt	$	54,646		$	54,474		$	55,525		$	55,040
Other liabilities	43,146			41,880			47,715			40,950
Deferred tax liabilities	37,919			36,847			70,276			68,846
Senior Notes held by special purpose entity	176,147			176,094
Senior notes held by special purpose entity							176,366			176,310
Total liabilities	311,858			309,295			349,882			341,146
EQUITY:
Common stock, no par value; 180,000,000 shares authorized; 92,332,565 issued at March 31, 2016 and December 31, 2015; and 74,333,907 and 75,329,557 outstanding at March 31, 2016 and December 31, 2015, respectively	892,387			892,387
Common stock, no par value; 180,000,000 shares authorized; 74,342,826 issued at both March 31, 2017 and December 31, 2016; and 72,297,845 and 74,342,826 outstanding at March 31, 2017 and December 31, 2016, respectively							572,059			572,040
Retained earnings	87,516			78,851			99,114			94,746
Accumulated other comprehensive loss	(740		)	(686		)
Treasury stock at cost, 17,998,658 and 17,003,008 held at March 31, 2016 and December 31, 2015, respectively	(320,109		)	(305,289		)
Accumulated other comprehensive income							3,219			2,507
Treasury stock at cost, 2,044,981 shares held at March 31, 2017							(34,156		)	—
Total stockholders’ equity	659,054			665,263			640,236			669,293
Non-controlling interest	8,073			8,184			17,326			17,506
Total equity	667,127			673,447			657,562			686,799
Total liabilities and equity	$	978,985		$	982,742		$	1,007,444		$	1,027,945

See notes to the condensed consolidated financial statements.

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(Unaudited)

The following presents the portion of the consolidated balances presented above attributable to the Company’s consolidated variable interest entities. The Company’s consolidated variable interest entities include the Pier Park North joint venture (“Pier Park North JV”), Windmark JV, LLC (“Windmark JV”), Artisan Park, L.L.C., Panama City Timber Finance Company, L.L.C. and Northwest Florida Timber Finance Company ~~L.L.C~~L.L.C. as discussed in Note 1,2. ~~Nature~~Summary of ~~Operations.~~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 the guarantees and covenants discussed in Note ~~10,~~9. Debt.


	March 31, 2016		December 31, 2015		March 31, 2017		December 31, 2016
ASSETS
Investment in real estate, net	$	46,450	$	46,156	$	63,946	$	63,362
Cash and cash equivalents	3,781		4,067		3,303		3,965
Other assets	11,239		12,853		11,882		13,209
Investments held by special purpose entities	208,414		208,785		208,219		208,590
Total assets	$	269,884	$	271,861	$	287,350	$	289,126
LIABILITIES
Debt	$	47,512	$	47,480	$	47,342	$	47,519
Other liabilities	2,193		4,416		2,194		4,275
Senior Notes held by special purpose entity	176,147		176,094
Senior notes held by special purpose entity					176,366		176,310
Total liabilities	$	225,852	$	227,990	$	225,902	$	228,104

See notes to the condensed consolidated financial statements.

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~INCOME

(Dollars in thousands except per share amounts)

(Unaudited)

Three Months Ended
March 31,
2016
2015
Revenues:
Real estate sales $ 7,081
$ 5,437
Resorts and leisure revenues 8,751
7,803
Leasing revenues 2,361
2,045
Timber sales 2,061
1,806
Total revenues 20,254
17,091
Expenses:
Cost of real estate sales 1,765
3,137
Cost of resorts and leisure revenues 9,319
8,806
Cost of leasing revenues 750
634
Cost of timber sales 210
184
Other operating and corporate expenses 6,819
7,117
Depreciation, depletion and amortization 2,288
2,915
Total expenses 21,151
22,793
Operating loss (897 ) (5,702 )
Other income (expense):
Investment income, net 2,730
5,212
Interest expense (3,035 ) (2,876 )
Claim settlement 12,548
—
Other, net 452
577
Total other income 12,695
2,913
Income (loss) before income taxes 11,798
(2,789 )
Income tax (expense) benefit (3,244 ) 1,073
Net income (loss) 8,554

(1,716 )
Net loss (income) attributable to non-controlling interest 111
(22 )
Net income (loss) attributable to the Company $ 8,665
$ (1,738 )

NET INCOME (LOSS) PER SHARE
Basic and Diluted
Weighted average shares outstanding 74,809,010
92,302,636
Net income (loss) per share attributable to the Company $ 0.12
$ (0.02 )



	Three Months Ended March 31,
	2017			2016
Revenue:
Real estate revenue	$	1,525		$	7,081
Resorts and leisure revenue	8,108			8,751
Leasing revenue	2,393			2,361
Timber revenue	1,171			2,061
Total revenue	13,197			20,254
Expenses:
Cost of real estate revenue	331			1,765
Cost of resorts and leisure revenue	8,804			9,319
Cost of leasing revenue	669			750
Cost of timber revenue	157			210
Other operating and corporate expenses	6,180			6,819
Depreciation, depletion and amortization	1,953			2,288
Total expenses	18,094			21,151
Operating loss	(4,897		)	(897		)
Other income (expense):
Investment income, net	10,356			2,730
Interest expense	(3,043		)	(3,035		)
Claim settlement	—			12,548
Other, net	4,051			452
Total other income, net	11,364			12,695
Income before income taxes	6,467			11,798
Income tax expense	(2,279		)	(3,244		)
Net income	4,188			8,554
Net loss attributable to non-controlling interest	180			111
Net income attributable to the Company	$	4,368		$	8,665

NET INCOME PER SHARE
Basic and Diluted
Weighted average shares outstanding	73,970,407			74,809,010
Net income per share attributable to the Company	$	0.06		$	0.12

See notes to the condensed consolidated financial statements.

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(Dollars in thousands)

(Unaudited)

Three Months Ended
March 31,
2016
2015
Net income (loss): $ 8,554
$ (1,716 )
Other comprehensive (loss) income, net of tax:
Available-for-sale investment items:
Net unrealized (loss) gains on available-for-sale investments (88 ) 1,257
Total before income taxes (88 ) 1,257
Income tax benefit (expense) 34
(484 )
Total (54 ) 773
Total other comprehensive (loss) income, net of tax (54 ) 773
Total comprehensive income (loss), net of tax $ 8,500
$ (943 )



	Three Months Ended March 31,
	2017			2016
Net income:	$	4,188		$	8,554
Other comprehensive income (loss), net of tax:
Available-for-sale investment items:
Net unrealized gain (loss) on available-for-sale investments	3,905			(88		)
Net unrealized gain on restricted investments	4			—
Reclassification of realized gain included in earnings	(3,122		)	—
Reclassification of other-than-temporary impairment loss included in earnings	366			—
Total before income taxes	1,153			(88		)
Income tax (expense) benefit	(441		)	34
Total other comprehensive income (loss), net of tax	712			(54		)
Total comprehensive income, net of tax	$	4,900		$	8,500

See notes to the condensed consolidated financial statements.

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in thousands)

(Unaudited)

Common Stock Retained Earnings
Accumulated
Other
Comprehensive
Loss

Outstanding
Shares
Amount
Treasury
Stock

Non-controlling
Interest
Total
Balance at December 31, 2015 75,329,557
$ 892,387
$ 78,851
$ (686 ) $ (305,289 ) $ 8,184
$ 673,447
Net income (loss) —
—
8,665
—
—
(111 ) 8,554
Other comprehensive loss —
—
—
(54 ) —
—
(54 )
Repurchase of common shares (995,650 ) —
—
—
(14,820 ) —
(14,820 )
Balance at March 31, 2016 74,333,907
$ 892,387
$ 87,516
$ (740 ) $ (320,109 ) $ 8,073
$ 667,127



	Common Stock				Retained Earnings		Accumulated Other Comprehensive Income
	Outstanding Shares		Amount		Retained Earnings		Accumulated Other Comprehensive Income		Treasury Stock			Non-controlling Interest			Total
Balance at December 31, 2016	74,342,826		$	572,040	$	94,746	$	2,507	$	—		$	17,506		$	686,799
Issuance of common stock for director’s fees			19		—		—		—			—			19
Repurchase of common shares	(2,044,981	)	—		—		—		(34,156		)	—			(34,156		)
Other comprehensive income	—		—		—		712		—			—			712
Net income (loss)	—		—		4,368		—		—			(180		)	4,188
Balance at March 31, 2017	72,297,845		$	572,059	$	99,114	$	3,219	$	(34,156	)	$	17,326		$	657,562

See notes to the condensed consolidated financial statements.

THE ST. JOE COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
Cash flows from operating activities:
Net income (loss)	$	8,554		$	(1,716	)
Adjustments to reconcile net income (loss) to net cash from operating activities:
Net income							$	4,188		$	8,554
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	2,288			2,915			1,953			2,288
Stock based compensation							19			—
Gain on sale of investments							(3,122		)	—
Other-than-temporary impairment loss							366			—
Deferred income tax expense	1,106			159			988			1,106
Cost of real estate sold	1,434			2,748			174			1,434
Expenditures for and acquisition of real estate to be sold	(1,249		)	(2,213		)	(2,183		)	(1,249		)
Deferred revenue	(160		)	(64		)
Accretion income and other	(365		)	(658		)	(1,208		)	(365		)
Changes in operating assets and liabilities:
Notes receivable	65			1,980			40			65
Claim settlement receivable	(12,548		)	—			—			(12,548		)
Other assets	1,004			(997		)	651			1,004
Other liabilities	2,165			152			4,928			4,142
Income taxes receivable	2,137			(1,233		)	348			—
Net cash provided by operating activities	4,431			1,073			7,142			4,431
Cash flows from investing activities:
Expenditures for Pier Park North joint venture	(277		)	(1,716		)
Purchases of property and equipment	(347		)	(900		)
Expenditures for Pier Park North JV							(489		)	(277		)
Expenditures for property and equipment							(4,847		)	(347		)
Purchases of investments	(9,275		)	—			(49,510		)	(9,275		)
Maturities of investments	—			125,000
Sales of investments	8,460			129,149			57,053			8,460
Maturities of assets held by special purpose entities	415			416			415			415
Net cash (used in) provided by investing activities	(1,024		)	251,949
Net cash provided by (used in) investing activities							2,622			(1,024		)
Cash flows from financing activities:
Repurchase of common shares	(14,820		)	—			(34,156		)	(14,820		)
Borrowings on construction/refinanced loan in Pier Park joint venture	—			2,171
Borrowings on construction loan							509			—
Principal payments for debt	(35		)	—			(226		)	(35		)
Net cash (used in) provided by financing activities	(14,855		)	2,171
Net (decrease) increase in cash and cash equivalents	(11,448		)	255,193
Debt issue costs							(20		)	—
Net cash used in financing activities							(33,893		)	(14,855		)
Net decrease in cash and cash equivalents							(24,129		)	(11,448		)
Cash and cash equivalents at beginning of the period	212,773			34,515			241,111			212,773
Cash and cash equivalents at end of the period	$	201,325		$	289,708		$	216,982		$	201,325

See notes to the condensed consolidated financial statements.

THE ST. JOE COMPANY

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

(Dollars in thousands)

(Unaudited)


	Three Months Ended March 31,				Three Months Ended March 31,
	2016		2015		2017		2016
Cash paid during the period for:
Interest expense	$	5,664	$	4,864	$	5,137	$	5,664
Income taxes	$	—	$	—	$	—	$	—

Non-cash financing and investing activities:
Increase in Community Development District debt	$	174	$	671	$	194	$	174
Decrease in pledged treasury securities related to defeased debt	$	—	$	158
Expenditures for operating properties and property and equipment financed through accounts payable	$	4	$	4	$	1,206	$	4

See notes to the condensed consolidated financial statements.

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 (the “Company”) is a Florida real estate development, asset management and operating company with real estate assets and operations currently concentrated primarily between Tallahassee and Destin, Florida.

The Company conducts primarily all of its business in the following five reportable operating segments: 1) residential real estate, 2) commercial real estate, 3) resorts and leisure, 4) leasing operations and 5) forestry.

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 ~~U.S.~~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. The equity method of accounting~~subsidiaries and variable interest entities where the Company is ~~used for investments~~the primary beneficiary. Investments in joint ventures and limited partnerships in which the Company has significant influence, but not a controlling ~~financial interest.~~interest are accounted for by the equity method. All significant intercompany ~~accounts~~transactions and ~~transactions~~balances have been eliminated in consolidation. The December 31, ~~2015~~2016 balance sheet amounts have been derived from the Company’s December 31, ~~2015~~2016 audited consolidated financial statements. Certain prior period 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 stockholders’ equity or net income (loss). Operating results for the three months ended March 31, ~~2016~~2017 are not necessarily indicative of the results of the Company that may be expected for the full year ending December 31, ~~2016.~~2017.

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 ~~its~~the VIEs economic performance and has the obligation to absorb losses or the right to receive benefits from the VIE that are significant to ~~it.~~the entity. The Company consolidates VIEs when it is the primary beneficiary of the VIE, including real estate joint ventures determined to be VIEs (see Note 9, 8.Real Estate Joint Ventures) ~~and VIEs involved in a 2014 real estate sale, as further described below.~~.

The 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 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, ~~2015.~~2016. The Company adheres to the same accounting policies in preparation of its unaudited interim condensed consolidated financial statements as the Company’s December 31, ~~2015~~2016 annual financial statements. 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.

Use of Estimates

~~Recently Adopted Accounting Pronouncements~~

~~Consolidation~~

~~In February 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02~~The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that amends the existing consolidation guidance related to (i) limited partnerships and similar legal entities, (ii) the evaluation of variable interests for fees paid to decision makers or service providers, (iii) the effect of fee arrangements and related parties on the primary beneficiary determination and (iv) certain investment funds. These changes are expected to limit the number of consolidation models and place more emphasis on risk of loss when determining a controlling financial interest. The Company adopted the new guidance as of January 1, 2016. The adoption of this guidance had no impact on the Company’s condensed consolidated balance sheets, statements of operations, statements of comprehensive income (loss), statements of cash flows or notes to the condensed financial statements.

~~Debt issuance costs~~

In April 2015, the FASB issued ASU 2015-03 that requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The amendment does not affect the recognition and measurement guidance for debt issuance costs. During the three months ended March 31, 2016, the Company adopted this ASU, which required retrospective application and resulted in the reclassificationreported amounts of ~~debt issuance costs of $2.1 million from other~~ assets, to a reduction of $0.7 million in debt and a reduction of $1.4 million in Senior Notes held by special purpose entity in the Company’s condensed consolidated balance sheet as of December 31, 2015. Other than this change in presentation, this ASU did not have an impact on the Company’s condensed consolidated financial condition, results of operations or cash flows. See Note 10, ~~Debt~~ ~~for more information.~~

~~Cloud computing costs~~

~~In April 2015, the FASB issued ASU 2015-05,~~ ~~Customer’s Accounting For Fees Paid In A Cloud Computing Arrangement,~~ which provides guidance for a customer’s accounting for cloud computing costs. This ASU is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2015. The adoption of this ASU had no impact on the Company’s financial condition, results of operations or cash flows.

~~Recently Issued Accounting Pronouncements~~

~~Revenue recognition~~

In May 2014, the FASB issued an ASU that establishes the principles used to recognize revenue for all entities. In March 2016, the FASB issued ASU 2016-08 that further clarifies the implementation guidance on principal versus agent considerations. The new guidance will be effective for annual and interim periods beginning after December 15, 2017. Early application will be permitted, but not before annual reporting periods beginning after December 15, 2016. 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.

~~Financial Instruments~~

~~In January 2016, the FASB issued ASU 2016-01 that amends existing guidance to address certain aspects of recognition, measurement, presentation,~~liabilities and disclosure of ~~financial instruments. The new guidance will require equity investments (except those accounted for under~~contingent assets and liabilities at the ~~equity method of accounting, or those that result in consolidation~~date of the ~~investee) to be measured at fair value with changes~~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 investments in ~~fair value recognized in net income. Additionally, certain disclosure requirements~~real estate, real estate impairment assessments, investments, other-than-temporary investment impairment assessments, retained interest investments, accruals and ~~other aspects of accounting for financial instruments will change as a result of the new guidance, which is effective for interim~~deferred income taxes. Actual results could differ from those estimates.

Cash and annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact that the adoption of the new guidance will have on its financial condition and results of operations.Cash Equivalents

~~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 from existing guidance. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. The new guidance will be effective for annual and interim periods beginning after December 15, 2018 and requires a modified retrospective adoption. The Company is currently evaluating the impact that the adoption of this guidance will have on its financial condition, results of operationsCash and cash ~~flows.~~equivalents include cash on hand, bank demand accounts, money market instruments, short term commercial paper and short term U.S. Treasury securities having original maturities at acquisition date of ninety days or less.

~~2. Investment in Real Estate~~

~~Real estate by property type and segment includes the following:~~

March 31,
2016 December 31,
2015
Development property:
Residential real estate $ 98,766
$ 99,413
Commercial real estate 56,652
56,587
Leasing operations 528
360
Forestry 2,639
2,681
Corporate 2,271
2,211
Total development property 160,856
161,252

Operating property:
Residential real estate 8,091
8,091
Resorts and leisure 109,525
109,425
Leasing operations 79,571
79,550
Forestry 19,234
19,300
Other 50
50
Total operating property 216,471
216,416
Less: Accumulated depreciation 65,589
64,069
Total operating property, net 150,882
152,347
Investment in real estate, net $ 311,738
$ 313,599

Development property consists of land the Company is developing or intends to develop for sale or future operations. Residential real estate includes mixed-use resort, primary and seasonal residential communities and includes costs directly associated with the land, development and construction of these communities, including common development costs such as roads, utilities and amenities and indirect costs such as development overhead, capitalized interest, marketing and project administration. Commercial real estate includes land for commercial and industrial uses, including land holdings near the Northwest Florida Beaches International Airport and Port of Port St. Joe, and includes costs directly associated with the land and development costs for these properties, which also include common development costs such as roads and utilities. Leasing development property primarily includes the land development and construction for the consolidated joint venture at Pier Park North. This leasing development property is being reclassified as operating property as tenants commence operations at Pier Park North.

Operating property includes property that the Company uses for operations and activities. The resorts and leisure operating property includes the WaterColor Inn, golf courses and marinas. Leasing operating property includes property developed or purchased by the Company and used for retail and commercial rental purposes, including property in the consolidated joint venture at Pier Park North. Operating property may be sold in the future as part of the Company’~~s principal real estate business. Forestry operating property includes the Company’s timberlands.~~

The Company had no capitalized indirect development costs during the three months ended March 31, 2016 and less than $0.1 million during the three months ended March 31, 2015, primarily related to the consolidated joint venture at Pier Park North.

~~3. Impairment of Long Lived Assets~~

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. Long-lived assets include the Company’s investments in operating and development property and property and equipment. As part of the Company’s review for impairment of its long-lived assets, the Company reviews long-lived asset’s carrying value, current period actual financial results as compared to prior period and forecast 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 losses for an operating property;~~

~~an accumulation of costs in excess of the projected costs for a development 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.

There were no events or changes in circumstances that would indicate that the carrying value of the Company’s long-lived assets would not be recoverable, and, therefore, the Company did not record any impairment charges during the three months ended March 31, 2016 and 2015.

4. Investments

Investments and restricted investments consist of available-for-sale securities ~~and are~~ recorded at fair value, which is ~~based on~~established through external pricing services that use quoted market prices and pricing data from ~~external pricing services that use prices observed for~~ recently executed market transactions. Unrealized gains and temporary losses on investments, net of tax, are recorded in other comprehensive income (loss) ~~income.~~. 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. ~~In addition, at March 31, 2016, the~~

The Company ~~had investments in short term commercial paper that are classified as cash equivalents, since they had maturity dates of ninety days or less from the date of purchase.~~

At ~~March 31, 2016~~ ~~investments and restricted~~evaluates investments classified as available-for-sale with an unrealized loss to determine if they are other-than-temporary 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 ~~as follows:~~

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
Debt securities:
U.S. Treasury securities $ 184,930
$ 19
$ —
$ 184,949
Corporate debt securities 9,546
11
1,117
8,440
Preferred stock 265
—
117
148
194,741

30

1,234

193,537
Restricted investments:
Money market fund 5,651
—
—
5,651
$ 200,392

$ 30

$ 1,234

$ 199,188

~~At December 31, 2015~~in a loss position, the Company’s ability and intent to hold investments until the unrealized loss is recovered or until maturity and ~~restricted investments classified as available-for-sale securities were as follows:~~

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
Debt securities:
U.S. Treasury securities $ 184,819
$ —
$ 79
$ 184,740
Corporate debt securities 7,273
—
981
6,292
Preferred stock 265
—
57
208
192,357

—

1,117

191,240
Restricted investments:
Guaranteed income fund 7,072
—
—
7,072
$ 199,429

$ —

$ 1,117

$ 198,312

~~Fairholme Capital Management, L.L.C.~~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), ~~or one of its affiliates (“Fairholme Capital”), has served as an investment advisor to~~unless the Company since April 2013. As of March 31, 2016, funds managed by Fairholme Capital beneficially owned approximately 32.3% of the Company’s common stock. Mr. Bruce Berkowitz is the Managing Member of Fairholme Capital and the Chairman of the Company’s Board of Directors. Fairholme Capital does not receive any compensation for services as the Company’s investment advisor.

Pursuant to the terms of the Company’s Investment Management Agreement with Fairholme Capital, as amended (the “Agreement”), Fairholme Capital agreed to supervise and direct the investments of investment accounts established by the Company in accordance with the investment guidelines and restrictions approved by the Investment Committee of the Company’s Board of Directors. The investment guidelines are set forth in the Agreement and require that, as of the date of any investment: (i) at least ~~50%~~ of the investment account be held in cash or cash equivalents, as defined in the Agreement, (ii) no more than 15% of the investment account may be invested in securities of any one issuer (excluding the U.S. Government) and (iii) any investment in any one issuer (excluding the U.S. Government) that exceeds ~~10%, but not 15%, requires the consent of at least two members of the Investment Committee. The investment account may not be invested in common stock securities.~~

As of March 31, 2016, the investment account included $184.9 million of U.S. Treasury securities, $8.4 million of corporate debt securities and $0.2 million of preferred stock investments (all of which are classified within investments on the Company’s condensed consolidated balance sheets). The corporate debt securities and preferred stock are issued by Sears Holdings Corp or affiliates, and are non-investment grade.

During the three months ended March 31, 2016, there were no realized losses from the sale or maturity of available-for-sale securities and proceeds from the sale of available-for-sale securities were $8.5 million.

During the three months ended March 31, 2015, there were no realized losses from the sale of available-for-sale securities, proceeds from the sale of available-for-sale securities were $129.1 million and proceeds from the maturity of available-for-sale securities were $125.0 million.

As of March 31, 2016 and December 31, 2015, certain of the Company’s debt securities and preferred stock had unrealized losses of $1.2 million and $1.1 million, respectively, that were deemed temporary and included in accumulated other comprehensive loss. The following table provides the debt securities and preferred stock unrealized loss position and related fair values:

As of March 31, 2016 As of December 31, 2015
Less Than 12 Months 12 Months or Greater Less Than 12 Months 12 Months or Greater
Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
Debt securities:
U.S. Treasury securities $ —
$ —
$ —
$ —
$ 184,740
$ 79
$ —
$ —
Corporate debt securities 8,251
1,117
—
—
6,292
981
—
—
Preferred stock 148
117
—
—
208
57
—
—
$ 8,399
$ 1,234
$ —
$ —
$ 191,240
$ 1,117
$ —
$ —

~~As of March 31, 2016 and December 31, 2015, the Company did not intend~~intends to sell the ~~investments with unrealized losses and~~security or it is more likely than not that the Company will ~~not~~ be required to sell ~~any~~the security prior to its anticipated recovery. During 2017, the Company determined that a certain unrealized loss was other than temporarily impaired and recorded an impairment of $0.4 million related to credit-related loss in investment income, net in the Company’s condensed consolidated statements of income.

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 ~~securities prior to their anticipated recovery, which could be maturity;~~assets; therefore, the ~~Company does not believe that its investment~~assets held in the ~~corporate debt securities was other-than-temporarily impaired at March 31, 2016 and December 31, 2015.~~

~~The net carrying value and estimated fair value of investments and restricted investments classified as available-for-sale at March 31, 2016, by contractual maturity~~suspense account are ~~shown~~included in the ~~following table. Actual maturities may differ from contractual maturities because certain borrowers have~~Company’s condensed consolidated balance sheets until they are allocated to current and future 401(k) plan participants for up to the ~~right to call or prepay obligations.~~next four years. See Note 14.Employee Benefit Plan.

Amortized Cost Fair Value
Due in one year or less $ 184,930
$ 184,949
Due after one year through five years 9,448
8,359
Due after ten years through fifteen years 98
81
194,476
193,389
Preferred stock 265
148
Restricted investments 5,651
5,651
$ 200,392
$ 199,188

~~5. Financial Instruments and~~ Fair Value Measurements

Fair value is an exit price, representing the amount that would be received to sell an asset or paid 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.

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 forecast 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 a development property; and

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

During the three months ended March 31, 2017 and March 31, 2016, there were no impairments of long-lived assets.

Comprehensive Income

The Company’s comprehensive income includes unrealized gains and temporary losses on available-for-sale securities and restricted investments.

Income Taxes

The Company follows the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax impact of differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred income tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in earnings in the period in which the new rate is enacted. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than fifty percent likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest related to unrecognized tax benefits, if any, in interest expense and penalties in other, net.

Concentration of Risks and Uncertainties

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 regional financial institutions, which balances as of March 31, 2017 exceed the amount of F.D.I.C. insurance provided on such deposits. In addition, as of March 31, 2017, the Company had $132.8 million invested in eight issuers of corporate debt securities that are non-investment grade, $41.0 million invested in four issuers of preferred stock that are non-investment grade and $1.8 million invested in one issuer of common stock. In addition, as of March 31, 2017, the Company had investments in short term commercial paper from nine issuers of $157.4 million and short term U.S. Treasury securities of $25.0 million.

Earnings Per Share

Basic earnings per share is calculated by dividing net income by the average number of common shares outstanding for the period. Diluted earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding for the period, including all potentially dilutive shares issuable under outstanding stock options. Stock options are not considered in any diluted earnings per share calculation when the Company has a loss from operations as their effect would be anti-dilutive. Non-vested restricted stock is included in outstanding shares at the time of grant. For the three months ended March 31, 2017 and 2016 basic average shares outstanding were the same as diluted shares outstanding. There were no outstanding common stock equivalents as of March 31, 2017 or December 31, 2016.

Revenue and Revenue Recognition

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

Real Estate Revenue

Revenue from real estate sales, including sales of homesites, commercial properties and rural or timberland, are recognized when a sale is closed and title transfers to the buyer, the buyer’s initial investment is adequate, any receivables are probable of collection, the usual risks and rewards of ownership have been transferred to the buyer, and the Company does not have significant continuing involvement with the real estate sold.

The buyer’s minimum initial investment requirement is typically the receipt of cash for approximately twenty to twenty-five percent of the sales value depending on the type and use of the property purchased. If the minimum initial investment requirement is not met, revenue may be deferred depending on the circumstances. In addition, revenue is not recognized until title transfers and any consideration received is deferred until title is transferred.

As part of the purchase price consideration for a homesite from sales to homebuilders, the Company may receive a percentage of the sale price of the completed home if the home price or gross profit of the home exceeds a negotiated threshold. These lot residuals are recognized in revenue when consideration is received by the Company in periods subsequent to the initial recognition of revenue for the sale of the homesite.

Resorts and Leisure Revenue

Resorts and leisure revenue includes service and rental fees associated with the WaterColor Inn and the Company’s vacation rental programs in WaterColor, WaterSound Beach and surrounding communities. In addition, other resorts and leisure revenue include club membership sales, daily play at golf courses, merchandise sales, food and beverage sales, marina boat slip rentals and fuel sales, and management services of The Pearl Hotel. The revenue is generally recognized as services are provided. Vacation rental revenue includes the entire rental fee collected from the customer, including the homeowner’s portion. A percentage of the fee is remitted to the homeowner and presented in cost of resorts and leisure revenue. The Company is the principal in its vacation rental business and has determined that it is the primary obligor to the guest, as it has sole discretion in establishing prices and provides the majority of the services to the guest. Club membership revenue is recognized when billed to the member and the non-refundable initiation fee is deferred and recognized ratably over the estimated membership period. Revenue generated from our management services of The Pearl Hotel includes a management fee, fifty percent of certain resort fees and a percentage of The Pearl Hotel’s gross operating profit.

Leasing Revenue

Leasing revenue consists of long term rental revenue from retail operations, commercial operations, cell towers and other assets, which is recognized as earned, using the straight-line method over the life of the lease. Leasing revenue includes properties located in the Company’s consolidated Pier Park North JV and Windmark JV, as well as the Company’s industrial park, VentureCrossings, and other properties. 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.

Forestry Product Revenue

Revenue from the sale of the Company’s forestry products is primarily derived from pay-as-cut sales contracts or timber bid sales, whereby risk of loss and title to the trees transfer to the buyer when cut by the buyer. Under a pay-as-cut sales contract, the buyer or some other third party is responsible for all logging and hauling costs, if any.

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. The buyer pays the full purchase price when the contract is signed and the Company does not have any additional performance obligations. Under a timber bid sale, the buyer or some other third party is responsible for all logging and hauling costs, if any, and the timing of such activity. Revenue from a timber bid sale is recognized when the contract is signed since the earnings process is complete.

Recently Adopted Accounting Pronouncements

Improvements to Employee Share-Based Payment Accounting

In March 2016, the FASB issued ASU 2016-09 that simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The Company adopted the new guidance as of January 1, 2017. The adoption of this guidance did not have a material impact on the Company’s financial condition, results of operations or cash flows.

Consolidation

In October 2016, the FASB issued ASU 2016-17 that amends the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a reporting entity that is a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The Company adopted the new guidance as of January 1, 2017. The adoption of this guidance had no impact on the Company’s financial condition, results of operations or cash flows.

Recently Issued Accounting Pronouncements

Revenue Recognition

In May 2014, the FASB issued ASU 2014-09 that establishes the principles used to recognize revenue for all entities. In March 2016, the FASB issued ASU 2016-08 that further clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10 that clarifies guidance on identifying performance obligations and to improve the operability and understandability of licensing implementation guidance. In May 2016, the FASB issued ASU 2016-11 that rescinds SEC guidance pursuant to announcements at the March 3, 2016 Emerging Issues Task Force Meeting. In May 2016, the FASB issued ASU 2016-12 that provides narrow-scope improvements and practical expedients to Revenue from Contracts with Customers. In December 2016, the FASB issued ASU 2016-20 that includes technical corrections and improvements to ASU 2014-09. The new guidance will be effective for annual and interim periods beginning after December 15, 2017. The Company plans to adopt this guidance effective January 1, 2018 and has evaluated the impact of the adoption of this guidance and as a result of this evaluation does not expect it will have a material impact on its financial condition, results of operations and cash flows.

Financial Instruments

In January 2016, the FASB issued ASU 2016-01 that amends existing guidance to address certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The new guidance will require equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in results of operations. Additionally, certain disclosure requirements and other aspects of accounting for financial instruments will change as a result of the new guidance, which is effective for interim and annual reporting periods beginning after December 15, 2017. The Company is currently evaluating the impact that the adoption of the new guidance will have on its financial condition, results of operations and cash flows.

Leases

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. This new guidance will be effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted for annual and interim periods beginning after December 15, 2018. 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.

Statement of Cash Flows

In August 2016, the FASB issued ASU 2016-15 that amends the classification of certain cash receipts and cash payments, to reduce the diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The new standard is effective for annual periods beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted, including adoption in an interim period. As this guidance only affects the classification within the statement of cash flows, it is not expected to have a material impact on the Company’s financial condition, results of operations and cash flows.

Income Taxes

In October 2016, the FASB issued ASU 2016-16 that requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. This amendment eliminates the exception for an intra-entity transfer of an asset other than inventory. The new standard is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted in the first interim period and the amendments should be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company is currently evaluating the impact that the adoption of the new guidance will have on its financial condition, results of operations and cash flows.

Business Combinations

In January 2017, the FASB issued ASU 2017-01 that clarifies the definition of a business for entities that must determine whether a business has been acquired or sold. The amendment is intended to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The new standard is effective for annual and interim periods beginning after December 15, 2017, with early adoption permitted under certain circumstances. The Company has evaluated the impact of the adoption of this guidance and as a result of this evaluation does not expect it will have a material impact 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, 2017		December 31, 2016
Development property:
Residential real estate	$	103,919	$	101,292
Commercial real estate	56,118		56,073
Resorts and leisure	855		263
Leasing operations	6,916		2,291
Forestry	2,491		2,492
Corporate	2,470		2,438
Total development property	172,769		164,849

Operating property:
Residential real estate	8,138		8,097
Resorts and leisure	105,818		107,029
Leasing operations	83,891		82,336
Forestry	20,072		19,608
Other	50		50
Total operating property	217,969		217,120
Less: Accumulated depreciation	68,641		67,349
Total operating property, net	149,328		149,771
Investment in real estate, net	$	322,097	$	314,620

Development property consists of land the Company is developing or intends to develop for sale or future operations. Residential real estate includes primary residential and resort residential communities, direct costs associated with the land, development and construction of these communities, including common development costs such as roads, utilities and amenities and indirect costs such as development overhead, capitalized interest, marketing and project administration. Commercial real estate consists of land for commercial and industrial uses, including land holdings near the Northwest Florida Beaches International Airport and Port of Port St. Joe, and includes direct costs, such as roads and utilities, associated with the land and development costs for the Company’s properties. Resorts and leisure development property currently consists of the improvement and expansion of existing beach club property. Leasing development property primarily includes the land development and construction of buildings for lease in VentureCrossings and a Pier Park outparcel, as well as the consolidated Pier Park North JV. Development property in the leasing operations and resorts and leisure segments will be reclassified as operating property as it is placed into service.

Operating property includes property that the Company uses for operations and activities. Residential real estate operating property consists primarily of residential utility assets. The resorts and leisure operating property includes the WaterColor Inn, vacation rental properties, golf courses, a beach club and marinas. Leasing operating property includes property developed or purchased by the Company and used for retail and commercial rental purposes, including property in the Pier Park North JV. 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.

The Company capitalized indirect development costs during the three months ended March 31, 2017 of less than $0.1 million and had no capitalized indirect development costs during the three months ended March 31, 2016.

4. Investments

At March 31, 2017, investments and restricted investments classified as available-for-sale securities were as follows:



	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Investments:
Corporate debt securities	$	128,200	$	6,005	$	1,420	$	132,785
Preferred stock	40,525		876		335		41,066
Common stock	1,662		110		—		1,772
	170,387		6,991		1,755		175,623
Restricted investments:
Short-term bond	4,235		4		—		4,239
Money market fund	209		—		—		209
	4,444		4		—		4,448
	$	174,831	$	6,995	$	1,755	$	180,071

At December 31, 2016, investments and restricted investments classified as available-for-sale securities were as follows:



	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
Investments:
Corporate debt securities	$	135,590	$	5,311	$	1,769	$	139,132
Preferred stock	36,048		656		111		36,593
	171,638		5,967		1,880		175,725
Restricted investments:
Short-term bond	4,232		—		6		4,226
Money market fund	1,410		—		—		1,410
	5,642		—		6		5,636
	$	177,280	$	5,967	$	1,886	$	181,361

Mr. Bruce R. Berkowitz is the Chairman of the Company’s Board of Directors. He is the Manager of, and controls entities that own and control, Fairholme Holdings, LLC, which wholly owns Fairholme Capital Management, L.L.C. (“FCM”, a registered investment advisor registered with the Securities and Exchange Commission) and the Fairholme Trust Company, L.L.C. (“FTC”, a non-depository trust company regulated by the Florida Office of Financial Regulation). Mr. Berkowitz is the Chief Investment Officer of FCM, and the Chief Executive Officer and a director of FTC. Since April 2013, FCM has provided investment advisory services to the Company directly, or more recently, as the sub-advisor to FTC. Neither FCM nor FTC receives any compensation for services as the Company’s investment advisor. As of March 31, 2017, clients of FCM and FTC beneficially owned approximately 33.75% of the Company’s common stock. FCM and its client the Fairholme Fund, a Series of the Fairholme Funds, Inc., are affiliates of the Company.

Both Mr. Cesar Alvarez and Mr. Howard Frank are members of the Company’s Board of Directors and also serve as directors of the Fairholme Funds, Inc. Mr. Alvarez is also a director of FTC.

Pursuant to the terms of the Investment Management Agreement, as amended (the “Agreement”), FTC agreed to supervise and direct the investments of investment accounts established by the Company in accordance with the investment guidelines and restrictions approved by the Investment Committee of the Company’s Board of Directors. The investment guidelines are set forth in the 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%, 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 or 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.

As of March 31, 2017, the investment account included $132.8 million of corporate debt securities, $41.0 million of preferred stock and $1.8 million of common stock investments. Of the $132.8 million corporate debt securities and $41.0 million preferred stock $8.5 million and $0.1 million, respectively, were issued by Sears Holdings Corp or affiliates, of which Messrs. Berkowitz and Alvarez are on the board of directors, and may be deemed an affiliate of FCM, or the Company.

During the three months ended March 31, 2017, realized gain from the sale of available for-sale securities were $3.1 million and proceeds from the sale of available-for-sale securities were $57.1 million.

During the three months ended March 31, 2016, there was no realized gain or loss from the sale or maturity of available for-sale securities and proceeds from the sale of available-for-sale securities were $8.5 million.

The following table provides the debt securities, preferred stock and restricted investments unrealized loss position and related fair values:



	As of March 31, 2017								As of December 31, 2016
	Less Than 12 Months				12 Months or Greater				Less Than 12 Months				12 Months or Greater
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investments:
Corporate debt securities	$	45,034	$	480	$	8,462	$	940	$	64,516	$	1,410	$	6,971	$	359
Preferred stock	7,447		272		132		63		—		—		153		111
Restricted investments:
Short-term bond	—		—		—		—		4,226		6		—		—
	$	52,481	$	752	$	8,594	$	1,003	$	68,742	$	1,416	$	7,124	$	470

As of March 31, 2017, the Company had an unrealized loss of $1.8 million related to corporate debt securities and preferred stock. The Company had an unrealized loss of $1.9 million as of December 31, 2016 related to corporate debt securities, preferred stock and restricted investments. As of March 31, 2017 and December 31, 2016, 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, which could be maturity. As of March 31, 2017, the Company determined that an unrealized loss related to its corporate debt securities and preferred stock was other-than-temporarily impaired and recorded an impairment of $0.4 million for credit-related loss in investment income, net in the Company's condensed consolidated statements of income.

The net carrying value and estimated fair value of investments and restricted investments classified as available-for-sale at March 31, 2017, by contractual maturity are shown in the following table. Actual maturities may differ from contractual maturities because certain borrowers have the right to call or prepay obligations.



	Amortized Cost		Fair Value
Due in one year or less	$	3,932	$	3,470
Due after one year through five years	124,177		129,266
Due after ten years through fifteen years	91		49
	128,200		132,785
Preferred stock	40,525		41,066
Common stock	1,662		1,772
Restricted investments	4,444		4,448
	$	174,831	$	180,071

5. Financial Instruments and Fair Value Measurements

Fair Value Measurements

The financial instruments measured at fair value on a recurring basis at March 31, ~~2016~~2017 were as follows:


	Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents:
Money market funds	$	20,308	$	—	$	—	$	20,308	$	12,524	$	—	$	—	$	12,524
Commercial paper	158,973		—		—		158,973		157,370		—		—		157,370
Debt securities:
U.S. Treasury securities	184,949		—		—		184,949		24,992		—		—		24,992
									194,886		—		—		194,886
Investments:
Corporate debt securities	—		8,440		—		8,440		44,372		88,413		—		132,785
Preferred stock	—		148		—		148		11,011		30,055		—		41,066
Common stock									1,772		—		—		1,772
									57,155		118,468		—		175,623
Restricted investments:
Short-term bond									4,239		—		—		4,239
Money market fund	5,651		—		—		5,651		209		—		—		209
	$	369,881	$	8,588	$	—	$	378,469	4,448		—		—		4,448
									$	256,489	$	118,468	$	—	$	374,957

The financial instruments measured at fair value on a recurring basis at December 31, ~~2015~~2016 were as follows:


	Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents:
Money market funds	$	18,233	$	—	$	—	$	18,233	$	86,236	$	—	$	—	$	86,236
Commercial paper	174,973		—		—		174,973		129,671		—		—		129,671
Debt securities:
U.S. Treasury securities	184,740		—		—		184,740
									215,907		—		—		215,907
Investments:
Corporate debt securities	—		6,292		—		6,292		57,788		81,344		—		139,132
Preferred stock	—		208		—		208		19,177		17,416		—		36,593
									76,965		98,760		—		175,725
Restricted investments:
Guaranteed income fund	—		7,072		—		7,072
Short-term bond									4,226		—		—		4,226
Money market fund									1,410		—		—		1,410
	$	377,946	$	13,572	$	—	$	391,518	5,636		—		—		5,636
									$	298,508	$	98,760	$	—	$	397,268

Money market funds, commercial paper, U.S. Treasury securities, certain corporate debt securities, certain preferred stock, common stock and ~~commercial paper~~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, ~~and~~ commercial paper and short term U.S. Treasury securities with a maturity date of ninety days or less from the date of purchase are classified as cash equivalents in the Company’s condensed consolidated balance sheets.

~~Corporate~~Certain corporate debt securities and preferred stock are measured primarily using pricing data from external pricing services that use prices observed for recently executed market transactions for the corporate debt security and the preferred stock that the Company owns. Corporate debt securities andcertain preferred stock are not traded on a nationally recognized exchange but rather are traded in the U.S. ~~over the counter~~over-the-counter market where there is less trading ~~activity.~~activity and these 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 ~~the~~certain corporate debt securities and certain preferred stock are categorized as level 2 financial instruments since their fair values were determined from market inputs in an inactive market.

Restricted investments 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 condensed consolidated financial statements until they are allocated to participants. As of March 31, 2017 and December 31, ~~2015,~~2016, the assets held in the suspense account were invested in the Prudential Guaranteed Income Fund, which is a stable value fund designed to provide safety of principal, liquidity, and a rate of return. The Prudential Guaranteed Income Fund is valued based upon the contributions made to the fund, plus earnings at guaranteed crediting rates, less withdrawals and fees and are categorized as level 2 financial instruments. As of March 31, 2016 the assets were transferred to a Vanguard Money Market Fund, which invests in ~~U.S. government~~short-term, high quality securities and seeks to provide current income and preserve shareholders’ principal ~~investment.~~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 Fund isand 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. Refer to Note ~~15,~~14. Employee Benefit ~~Plans~~Plan.

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 Company’s retained interest investments is based on the present value of the expected future cash flows at the effective yield.

The fair value of the ~~Investments~~investments held by special purpose entities - time deposit is based on the present value of future cash flows at the current market rate.

The fair value of the ~~Investments~~investments held by special purpose entities - U.S. Treasury securities are measured based on quoted market prices in an active market.

The fair value of the ~~Senior Notes~~senior notes held by special purpose entity is based on the present value of future cash flows at the current market rate.

The carrying amount and fair value of the Company’s financial instruments were as follows:


	March 31, 2016					December 31, 2015					March 31, 2017					December 31, 2016
	Carrying value		Fair value		Level	Carrying value		Fair value		Level	Carrying value		Fair value		Level	Carrying value		Fair value		Level
Assets
Retained interest investments	$	10,316	$	13,257	3	$	10,246	$	13,333	3	$	10,757	$	13,760	3	$	10,635	$	13,669	3
Investments held by special purpose entities:
Time deposit	$	200,000	$	200,000	3	$	200,000	$	200,000	3	$	200,000	$	200,000	3	$	200,000	$	200,000	3
U.S. Treasury securities and cash equivalents	$	8,414	$	8,952	1	$	8,785	$	9,033	1	$	8,219	$	8,055	1	$	8,590	$	8,398	1
Liabilities
Senior Notes held by special purpose entity	$	176,147	$	208,525	3	$	176,094	$	178,035	3
Senior notes held by special purpose entity											$	176,366	$	198,690	3	$	176,310	$	199,691	3

Retained Interest Investments

~~The~~The Company has a beneficial interest in certain ~~bankruptcy remote~~bankruptcy-remote qualified ~~special purpose entities (the “SPEs”)~~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. In the event that proceeds from the financial instruments are insufficient to settle all of the liabilities of the SPEs, the Company is not obligated to contribute any funds to the SPEs. The Company has determined that it is not the primary beneficiary of the SPEs, since the Company is not the primary decision maker with respect to activities that could significantly impact the economic performance of the SPEs, nor does the Company perform any service activity related to the SPEs. Therefore, the SPEs’ assets and liabilities are not consolidated in the Company’s condensed consolidated financial statements as of March 31, ~~2016~~2017 and December 31, ~~2015.~~

At the time of monetization the initial retained interest recorded was an estimate based on the present value of future excess cash flows expected to be received over the life of the retained interest, using management’s best estimate of underlying assumptions, including credit risk and discount rates. 2016. The Company’s continuing involvement with the SPEs is the receipt of the net interest payments and the remaining principal of approximately ~~$15.1~~$16.9 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 ~~$10.3~~$10.8 million and ~~$10.2~~$10.6 million as of March 31, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively, recorded in other assets on the Company’s condensed consolidated balance sheets. The Company has classified its retained interest investment as held-to-maturity because the Company has both the intent and the ability to hold its interest in the SPEs to maturity. Accordingly, the Company has recorded the retained interest investment at cost, adjusted for the accretion of investment income over the life of the retained interest using the effective yield method with rates ranging from 3.7% to 11.4%. The Company continues to update the expectation of cash flows to be collected over the term of the retained interest. Changes to the previously projected cash flows are accounted for prospectively, unless based on management’s assessment of current information and events, it is determined that there is an other-than-temporary impairment. The Company has not recorded an other-than-temporary impairment related to its retained interest investments during the three months ended March 31, 2016 and 2015.

In the event of a failure and liquidation of the counterparties involved in the installment sales, the Company could be required to write-off the remaining retained interest recorded on its condensed consolidated balance sheets in connection with the installment sale monetization transactions in 2007 and 2008.

Investments and Senior Notes Held by Special Purpose Entities

In connection with a real estate sale in 2014, the Company received consideration ~~consisting of (i) cash, (ii)~~including a $200.0 million fifteen-year installment note (the “Timber Note”) issued by Panama City Timber Finance Company, LLC ~~a buyer-sponsored special purpose entity~~ (“~~AgReserves SPE”~~PCTFC”) ~~and (iii) an Irrevocable Standby Letter of Credit issued by JPMorgan Chase Bank, N.A. (the “Letter of Credit”) at the request of AgReserves SPE, in favor of the Company. In 2014, the~~. The Company contributed the Timber Note and assigned its rights as a beneficiary under ~~the Letter~~a letter of ~~Credit~~credit to Northwest Florida Timber Finance, LLC (“NFTF”)~~, a bankruptcy-remote, qualified special purpose entity wholly-owned by the Company.~~. NFTF monetized the Timber Note by issuing $180.0 million aggregate principal amount of its 4.8% Senior Secured Notes due in 2029 (the “Senior Notes”) at an issue price of 98.5% of face value to third party investors. ~~AgReserves SPE and NFTF are VIEs, which the Company consolidates as the primary beneficiary of each entity.~~ The investments held by ~~special purpose entities~~PCTFC as of March 31, 2017, 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 ~~$8.1~~$7.8 million and cash of ~~$0.3~~$0.4 million. The Senior Notes ~~issued~~held by NFTF as of March 31, 2017 consist of ~~$176.1~~$176.4 million, net of the ~~$3.9~~$3.6 million discount and debt issuance costs. PCTFC and NFTF are VIEs, which the Company consolidates as the primary beneficiary of each entity.

6. ~~Notes Receivable, Net~~

~~Notes receivable, net consists of the following:~~

March 31,
2016 December 31,
2015
Pier Park Community Development District notes, non-interest bearing, due December 2024, net of unamortized discount of $0.1 million, effective rates 5.73% — 8.0% $ 1,986
$ 1,985
Interest bearing homebuilder notes, secured by the real estate sold — 4.0% interest rate, any remaining payments outstanding are due August 2016 33
90
Various mortgage notes, secured by certain real estate, bearing interest at various rates 472
480
Total notes receivable, net $ 2,491
$ 2,555

~~The Company evaluates the carrying value of the notes receivable and the need for an allowance for doubtful notes receivable at each reporting date.~~

7. Claim Settlement Receivable

On March 24, 2016, the Company entered into a full and final release agreement with BP p.l.c. and various related entities pursuant to which the Company, on its own behalf and on behalf of certain wholly owned subsidiaries, released any and all claims related to the Deepwater Horizon oil spill which occurred on April 20, 2010. In exchange for this release, the Company will receive ~~the amount~~$13.2 million, of ~~$13.2~~which $8.2 million remains to be received as of March 31, 2017, from BP Exploration & Production Inc., a large portion of which will reimburse the Company for expenses incurred. ~~Payment of~~On October 3, 2016, the Company received a $5.0 million payment. The remaining settlement amount ~~is to~~will be made ~~pursuant to the following schedule: the amount of $5.0 million is to be paid~~ in ~~October of 2016 followed by~~ payments of $2.7 million due in October of 2017, 2018 and 2019. The Company also received a guaranty of payments from BP North America Corporation Inc. ~~During the three months ended~~As of March ~~31,~~24, 2016, the Company recorded the claim settlement receivable using an imputed interest rate of 3.0%, based on its best estimate of the prevailing market rates for the source of credit, resulting in an initial present value of $12.5 million and a discount of $0.7 million. $12.5 million of the claim settlement was recognized as other income in the Company’s condensed consolidated statements of ~~operations~~income for the three months ended March 31, 2016. The discount is being accreted over the ~~expected three and a half year~~ term of the receivable using the effective interest method. Interest income ~~during~~for the three months ended March 31, 2017 and the period from March 24, 2016 ~~through~~to March 31, 2016 was less than $0.1 million.

8.7. Other Assets

~~Other~~Other assets consist of the following:


	March 31, 2016		December 31, 2015		March 31, 2017		December 31, 2016
Retained interest investments	$	10,316	$	10,246	$	10,757	$	10,635
Accounts receivable, net	4,575		4,382		3,858		4,625
Notes receivable, net					1,886		1,926
Prepaid expenses	6,187		5,849		6,951		5,685
Straight line rent	3,741		3,732		3,806		3,812
Income tax receivable	138		2,275
Other assets	7,248		6,751		8,280		8,789
Accrued interest receivable for Senior Notes held by special purpose entity	1,335		3,338
Accrued interest receivable for Senior Notes held by SPE					935		2,938
Total other assets	$	33,540	$	36,573	$	36,473	$	38,410

Notes receivable, net consists of the following:



	March 31, 2017		December 31, 2016
Pier Park Community Development District notes, non-interest bearing, due September 2022	$	1,684	$	1,684
Interest bearing homebuilder notes, secured by the real estate sold — 4.0% interest rate, due December 2016, paid January 2017	—		33
Various mortgage notes, secured by certain real estate, bearing interest at various rates	202		209
Total notes receivable, net	$	1,886	$	1,926

The Company evaluates the carrying value of the notes receivable and the need for an allowance for doubtful notes receivable at each reporting date. As of March 31, 2017 and December 31, 2016, there was no allowance for doubtful notes receivable.

9.8. Real Estate Joint Ventures

The Company enters into real estate joint ventures, from time to time, for the purpose of developing real estate 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 the VIE ~~losses~~loss and right to receive benefits that are 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~~continues to assess whether it is the primary beneficiary on an ongoing basis.

Consolidated Real Estate Joint Ventures

In December 2016, the Company entered into a joint venture agreement with Windmark JV pursuant to which the Company transferred to Windmark JV all of its interest in the Windmark Beach project. As of March 31, 2017 and December 31, 2016, the Company owned a 49.0% equity interest in the consolidated joint venture. A wholly owned subsidiary of the Company is the managing member of Windmark JV and runs its day-to-day operations. Windmark JV owns and its members make major decisions related to the management and development of the Windmark Beach project. For financial accounting purposes, the Company is deemed to control Windmark JV, which is consolidated within the financial results of the Company as of March 31, 2017 and December 31, 2016.

During 2012, the Company entered into a joint venture agreement with a partner to develop a retail center at Pier Park North. As of March 31, 2017 and December 31, 2016, the Company owned a 60.0% equity interest in the consolidated joint venture. The Company’s partner is responsible for the day-to-day activities of the joint venture. 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 joint venture is a VIE and that the Company is the VIE’s primary beneficiary as of March 31, ~~2016~~2017 and December 31, ~~2015.~~

In October 2015, the Pier Park North joint venture refinanced a construction loan by entering into a $48.2 million loan (the “Refinanced Loan”), which is secured by a first lien on, and security interest in, a majority of the Pier Park North joint venture’s property and a $6.6 million short-term letter of credit. Additionally, in connection with this refinancing, each of the Pier Park North joint venture partners executed a limited guarantee in favor of the lender, based on their percentage ownership in the joint venture. See Note 10, ~~Debt~~.2016.

In addition, the Company is the primary beneficiary of Artisan Park, L.L.C, another real estate joint venture ~~Artisan Park, L.L.C,~~ that is consolidated within the financial results of the Company. The Company is entitled to 74% of the ~~profits~~profit or ~~losses~~loss of this VIE and is responsible for the day-to-day activities of the joint venture. The Company has determined that the Company is the primary beneficiary as it has the power to direct the activities that most significantly impact the joint venture’s economic performance; therefore, the results of the VIE have been consolidated within the financial results of the Company.

Unconsolidated Real Estate VIE

As of March 31, 2017 and December 31, 2016, the Company iswas a partner in ALP Liquidating Trust (“~~ALP~~”(“ALP”) that is accounted for using the equity method. The joint venture was entered into to develop and sell certain mixed use residential and commercial projects. The Company has evaluated the VIE consolidation requirements with respect to this joint venture and has determined that the Company is not the primary beneficiary, since the Company does not have the power to direct the activities that most significantly impact the economic performance of the VIE. The Company is not required to contribute additional funds to ALP.

Summarized financial information for ALP is as follows:


	March 31, 2016		December 31, 2015		March 31, 2017		December 31, 2016

BALANCE SHEETS:
Cash and cash equivalents	$	13,164	$	13,760	$	11,412	$	11,948
Other assets	59		58		61		59
Total assets	$	13,223	$	13,818	$	11,473	$	12,007

Accounts payable and other liabilities	$	1,381	$	1,978	$	592	$	955
Equity⁽¹⁾	11,842		11,840		10,881		11,052
Total liabilities and equity	$	13,223	$	13,818	$	11,473	$	12,007

(1) In 2008 the Company wrote-off its investment in ALP as a result of ALP reserving its assets to satisfy potential claims and obligations in accordance with its publicly reported liquidation basis of accounting. Subsequently, ALP changed its method of accounting to a going concern basis and reinstated its equity and stated it would report certain expenses as they are incurred. The Company has not recorded any additional equity income as a result of ALP’s change in accounting.

For the three months ended March 31, ~~2016~~2017 and ~~2015,~~2016, ALP reported net loss of $0.2 million and net income of less than $0.1 million, ~~and a net loss of $0.6 million,~~ respectively.

~~10.~~9. Debt

Debt consists of the following at March 31, ~~2016:~~2017:

Principal
Unamortized Discount and Debt Issuance Costs
Net
Refinanced loan in the Pier Park North joint venture, due November 2025, bearing interest at 4.1% $ 48,200

$ 688

$ 47,512
Community Development District debt, secured by certain real estate and standby note purchase agreements, due May 2031 - May 2039, bearing interest at 3.1% to 7.0% at March 31, 2016 7,134

—

7,134
Total debt $ 55,334

$ 688

$ 54,646



	Principal		Unamortized Discount and Debt Issuance Costs		Net
Refinanced loan in the Pier Park North JV, due November 2025, bearing interest at 4.1%	$	47,926	$	584	$	47,342
Community Development District debt, secured by certain real estate or other collateral, due May 2031 - May 2039, bearing interest at 3.4% to 7.0% at March 31, 2017	7,695		—		7,695
Construction loan, due March 2027, bearing interest at LIBOR plus 1.7% (effective rate of 2.7% at March 31, 2017)	508		20		488
Total debt	$	56,129	$	604	$	55,525

Debt consists of the following at December 31, ~~2015:~~2016:

Principal Unamortized Discount and Debt Issuance Costs Net
Refinanced loan in the Pier Park North joint venture, due November 2025, bearing interest at 4.1% $ 48,200
$ 720
$ 47,480
Community Development District debt, secured by certain real estate and standby note purchase agreements, due May 2016 - May 2039, bearing interest at 2.8% to 7.0% at December 31, 2015 6,994
—
6,994
Total debt $ 55,194
$ 720
$ 54,474



	Principal		Unamortized Discount and Debt Issuance Costs		Net
Refinanced loan in the Pier Park North JV, due November 2025, bearing interest at 4.1%	$	48,132	$	613	$	47,519
Community Development District debt, secured by certain real estate or other collateral, due May 2031 - May 2039, bearing interest at 3.4% to 7.0% at December 31, 2016	7,521		—		7,521
Total debt	$	55,653	$	613	$	55,040

In October 2015, the Pier Park North JV refinanced a construction loan by entering into a $48.2 million loan (the “Refinanced Loan”). As of March 31, 2017 and December 31, 2016, $47.9 million and $48.1 million, respectively, was outstanding on the Refinanced Loan. The Refinanced Loan accrues interest at a rate of 4.1% per annum and matures in November 2025. The Refinanced Loan was secured by a first lien on, and security interest in, a majority of the Pier Park North JV’s property and a remaining $1.3 million short term letter of credit. In connection with the Refinanced Loan, the Company entered into a limited guarantee in favor of the lender, based on its percentage ownership of the joint venture. In addition, the guarantee can become full recourse in the case of any fraud or intentional misrepresentation by the Pier Park North ~~joint venture;~~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 or insolvency proceedings and upon breach of covenants in the security instrument.

Community Development District (“CDD”) bonds financed the construction of infrastructure improvements at several of the Company’s projects. The principal and interest payments on the bonds are paid by assessments on ~~or from sales proceeds of,~~ the properties benefited by the improvements financed by the bonds. The Company has recorded a liability for CDD assessments that are associated with platted property, which is the point at which the assessments become fixed or determinable. Additionally, the Company has recorded a liability for the balance of the CDD assessment that is associated with unplatted ~~property~~property if it is probable and reasonably estimable that the Company will ultimately be responsible for repaying. The Company has recorded debt of ~~$7.1~~$7.7 million and ~~$7.0~~$7.5 million related to CDD assessments as of March 31, ~~2016~~2017 and December 31, ~~2015,~~2016, respectively. The Company’s total outstanding CDD assessments were ~~$22.5~~$22.6 million ~~at both~~as of March 31, ~~2016~~2017 and December 31, ~~2015.~~2016. The Company pays interest on the total outstanding CDD assessments.

In March 2017, a wholly owned subsidiary of the Company entered into a $1.6 million construction loan to finance the construction of a two retail tenant commercial leasing property located in Panama City Beach, Florida (the “Construction Loan”). The Construction Loan bears interest at LIBOR plus 1.70% and matures in March 2027. The Construction Loan provides for interest only payments during the first twelve months and principal and interest payments thereafter with a final balloon payment at maturity. The 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 Construction Loan, the Company executed a guarantee in favor of the lender to guarantee the payment and performance of the borrower under the Construction Loan until the project meets certain cash flow stabilization requirements. As of March 31, 2017, $0.5 million was outstanding under the Construction Loan.

The aggregate maturities of debt subsequent to March 31, ~~2016~~2017 are:


	March 31, 2016		March 31, 2017
2016	$	213
2017	988		$	784
2018	1,029		1,047
2019	1,071		1,094
2020	1,116		1,139
2021			1,186
Thereafter	50,917		50,879
	$	55,334	$	56,129

~~11.~~10. Other Liabilities

Other liabilities consist of the following:


	March 31, 2016		December 31, 2015		March 31, 2017		December 31, 2016
Accounts payable	$	3,333	$	2,585	$	6,164	$	4,376
Accrued compensation	1,802		3,366		1,269		2,655
Deferred revenue	14,998		15,222		16,261		15,289
Membership deposits	7,202		7,778
Membership deposits and initiation fees					7,852		7,384
Advance deposits	8,233		3,574		7,872		3,419
Other accrued liabilities	6,866		6,505		7,585		4,977
Accrued interest expense for Senior Notes held by special purpose entity	712		2,850
Accrued interest expense for Senior Notes held by SPE					712		2,850
Total other liabilities	$	43,146	$	41,880	$	47,715	$	40,950

Deferred revenue at March 31, ~~2016~~2017 and December 31, ~~2015~~2016 includes $12.5 million related to a 2006 agreement pursuant to which the Company agreed to sell ~~approximately 3,900 acres of rural~~ land to the Florida Department of ~~Transportation (the “FDOT”).~~Transportation. Revenue is recognized when title to a specific parcel is legally transferred.

Membership deposits and initiation fees consist of deposits and fees received for club memberships. Initiation fees are recognized as revenue over the estimated average duration of membership, which is evaluated periodically.

Advance deposits consist of deposits received on hotel rooms and vacation ~~rentals,~~rentals. Advance deposits are recorded as other liabilities in the condensed 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.

Other accrued liabilities include $1.2 million of accrued property taxes as of March 31, 2017, which are generally paid annually in November. As of December 31, 2016 the Company had no accrued property taxes.

~~12.~~11. Income Taxes

Income tax expense differed from the amount computed by applying the federal statutory rate of 35% to pre-tax ~~loss~~income or ~~income~~loss as a result of the following:


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
Tax expense (benefit) at the federal statutory rate	$	4,168		$	(982	)
State income tax expense (benefit) (net of federal benefit)	417			(98		)
Tax at the federal statutory rate							$	2,326		$	4,168
State income taxes (net of federal benefit)							233			417
Tax effect of timber at the federal statutory rate of 23.8%	(206		)	—			(114		)	(206		)
Decrease in valuation allowance	(354		)	(14		)	(280		)	(354		)
Other	(781		)	21			114			(781		)
Total income tax expense (benefit)	$	3,244		$	(1,073	)
Total income tax expense							$	2,279		$	3,244

~~As of March 31, 2016, the~~The Company had no federal net operating loss carryforwards as of March 31, 2017 and December 31, 2016. The Company had ~~$319.0~~a federal AMT credit carryforward of $12.7 million and $13.5 million as of March 31, 2017 and December 31, 2016, respectively. The AMT credit carryforward is available indefinitely to offset future federal income tax liabilities. As of March 31, 2017 and December 31, 2016, the Company had state net operating loss carryforwards ~~which are~~of $421.0 million and $427.3 million, respectively. The state net operating loss is available to offset future taxable income through ~~2031.~~2036.

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.

As of December 31, ~~2015,~~2016, based on the timing of reversal of future taxable amounts and the Company’s history of losses, management did not believe it met the requirements to realize the benefits of certain of its deferred tax assets; therefore, the Company had maintained a valuation allowance of ~~$6.0~~$5.1 million. During the three months ended March 31, ~~2016,~~2017, the Company reversed $0.3 million of the valuation allowance that was recorded as of December 31, ~~2015.~~2016. As of March 31, ~~2016,~~2017, management believes it has not met the requirements to realize the benefits for a portion of its deferred tax assets for state net operating loss carryforwards; therefore, the Company has maintained a valuation allowance of ~~$5.7~~$4.8 million for these deferred tax assets.

The Company had approximately $1.7 million of total unrecognized tax benefits as of each March 31, 2017 and December 31, 2016. Of this total, there are no amounts of unrecognized tax benefits that, if recognized, would affect the effective income tax rate. There were no decreases or increases related to prior year or current year tax positions.

In December 2016, the Company entered into a joint venture agreement with Windmark JV, pursuant to which the Company sold to Windmark JV all of its interest in the Windmark Beach project. The sale of the Windmark Beach project created a net taxable loss for the Company in 2016. The loss will be carried back to 2014 for a federal income tax refund of $22.3 million.

~~13.~~

12. Accumulated Other Comprehensive ~~Loss~~Income

Following is a summary of the changes in the ~~accumulated~~ balances ~~for each component~~ of accumulated other comprehensive ~~loss,~~income, which is presented net of tax, ~~for the three months ended~~as of March 31, ~~2016 and 2015:~~2017:

Unrealized Losses on Available-for-Sale Securities Total
Accumulated other comprehensive loss at December 31, 2015 $ (686 ) $ (686 )
Other comprehensive loss (54 ) (54 )
Accumulated other comprehensive loss at March 31, 2016 $ (740 )
$ (740 )

Unrealized Gains and (Losses) on Available-for-Sale Securities Total
Accumulated other comprehensive loss at December 31, 2014 $ (1,325 ) $ (1,325 )
Other comprehensive income 773
773
Accumulated other comprehensive loss at March 31, 2015 $ (552 ) $ (552 )



	Unrealized Gain and (Loss) on Available-for-Sale Securities
Accumulated other comprehensive income at December 31, 2016	$	2,507
Other comprehensive income before reclassifications	2,405
Amounts reclassified from accumulated other comprehensive income	(1,693		)
Other comprehensive income	712
Accumulated other comprehensive income at March 31, 2017	$	3,219

Following is a summary of the tax effects allocated to ~~each component of~~ other comprehensive ~~loss~~income (loss) for the three months ended March 31, 2017 and 2016:

Three Months Ended March 31, 2016
Before-Tax Amount Tax Benefit or (Expense) Net-of-Tax Amount
Unrealized losses on available-for-sale investments $ (88 ) $ 34
$ (54 )



	Three Months Ended March 31, 2017
	Before-Tax Amount			Tax (Expense) or Benefit			Net-of-Tax Amount
Unrealized gain on debt securities:
Unrealized gain on available-for-sale investments	$	3,905		$	(1,503	)	$	2,402
Unrealized gain on restricted investments	4			(1		)	3
Reclassification adjustment for gain included in earnings	(3,122		)	1,203			(1,919		)
Reclassification adjustment for other-than-temporary impairment loss included in earnings	366			(140		)	226
Net unrealized gain	1,153			(441		)	712
Other comprehensive income	$	1,153		$	(441	)	$	712

~~Following is a summary of the tax effects allocated to each component of other comprehensive income for~~



	Three Months Ended March 31, 2016
	Before-Tax Amount			Tax Benefit		Net-of-Tax Amount
Unrealized loss on available-for-sale investments	$	(88	)	$	34	$	(54	)

13. Stockholders’ Equity

Stock Repurchase Program

During the three months ended March 31, ~~2015:~~

Three Months Ended March 31, 2015
Before-Tax Amount Tax Benefit or (Expense) Net-of-Tax Amount
Unrealized gains on available-for-sale investments $ 1,257
$ (484 ) $ 773

~~14. Stock~~2017 and 2016, the Company repurchased 2,044,981 and 995,650 shares, respectively, of its common stock at an average purchase price of $16.70 and $14.88, per share, respectively, for an aggregate purchase price of $34.2 million and $14.8 million, respectively, pursuant to its stock repurchase program (the “Stock Repurchase ~~Program~~

Program”). As of ~~January 1, 2016,~~March 31, 2017, the Company had a total authority of ~~$205.7~~$156.8 million available for purchase of shares of its common stock pursuant to its stock repurchase program (the “Stock Repurchase Program”). In the first quarter of 2016, the Company repurchased 995,650 shares of its common stock at an average purchase price of $14.88 per share, for an aggregate purchase price of $14.8 million, pursuant to its Stock Repurchase Program. As of March 31, 2016, the Company had a total authority of $190.9 million remaining available for purchase of shares under 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 other factors. 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 of Directors at any time in its sole discretion. During the period from April 1, 2017 through May 1, 2017, the Company purchased an additional 327,963 shares for an aggregate purchase price of $5.6 million.

Issuance of Common Stock for Director’s Fees

On May 17, 2016, the Board approved the issuance of 8,919 restricted stock awards to three members of the Board of Directors as part of their compensation package and pursuant to the 2015 Performance and Equity Incentive 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 the three months ended March 31, 2017, the Company recorded expense of less than $0.1 million, related to restricted stock awards to the Company’s directors.

~~15.~~

14. Employee Benefit ~~Plans~~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 condensed consolidated financial statements until they are allocated to participants. AtAs of March 31, ~~2016~~2017 and December 31, ~~2015,~~2016, the fair ~~values~~value of these assets ~~were~~was recorded in restricted investments on the Company’s condensed consolidated balance sheets and were ~~$5.7~~$4.4 million and ~~$7.1~~$5.6 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 ~~five~~four years. During the three months ended March 31, ~~2016~~2017 and ~~2015,~~2016, the Company recorded an expense of ~~$1.4~~$1.2 million and ~~$0.9~~$1.4 million, respectively, for the fair value of the assets, less expenses, that were allocated to participants during that period. ~~In addition, any gains and losses~~Any gain or loss on these assets ~~are~~is reflected in the Company’s condensed consolidated ~~financial~~ statements of income and ~~were~~was less than a $0.1 million gain for both the three months ended March 31, ~~2016~~2017 and ~~2015.~~2016. Refer to Note 5,5. Financial Instruments and Fair Value ~~Measurements.~~Measurements.

~~16.~~15. Other Income (Expense)

Other income (expense) consists of the following:


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
Investment income, net
Net investment income from available-for-sale securities
Interest and dividend income	$	189		$	2,257		$	4,548		$	189
Accretion income	464			621			922			464
Realized gain on the sale of investments							3,122			—
Other-than-temporary impairment loss							(366		)	—
Total net investment income from available-for-sale securities	653			2,878			8,226			653
Interest income from investments in special purpose entities	2,050			2,003
Interest income from investments in SPEs							2,051			2,050
Interest accrued on notes receivable and other interest	27			331			79			27
Total investment income, net	2,730			5,212			10,356			2,730
Interest expense
Interest expense and amortization of discount and issuance costs for Senior Notes issued by special purpose entity	(2,190		)	(2,188		)
Interest expense and amortization of discount and issuance costs for Senior Notes issued by SPE							(2,193		)	(2,190		)
Interest expense	(845		)	(688		)	(850		)	(845		)
Total interest expense	(3,035		)	(2,876		)	(3,043		)	(3,035		)
Claim settlement	12,548			—			—			12,548
Other income, net
Other, net
Accretion income from retained interest investments	241			211			263			241
Hunting lease income	199			210			139			138
Other income, net	12			156
Other income, net	452			577
Miscellaneous income, net							3,649			73
Other, net							4,051			452

Total other income	$	12,695		$	2,913
Total other income, net							$	11,364		$	12,695

Investment ~~income, net~~Income, Net

Interest and dividend income includes interest income accrued or received on the Company’s corporate debt securities and dividend income received from the Company’s preferred stock and other investments. 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. Realized gain on the sale of investments include the gain recognized on the sale of an available-for-sale ~~securities.~~security prior to maturity. During the three months ended March 31, 2017, the Company determined that a portion of its investments in corporate debt securities and preferred stock were other-than-temporarily impaired and recorded a $0.4 million impairment related to credit-related loss in investment income, net on the Company's condensed consolidated statements of income. See Note 4.Investments.

Interest ~~income~~income from investments in ~~special purpose entities~~SPEs primarily includes interest accrued or received on the ~~Timber Note,~~investments held by PCTFC, which is used to pay the interest expense for ~~the~~ Senior Notes ~~issued~~held by NFTF.

Interest ~~expense~~Expense

Interest expense includes interest expense related to the Company’s CDD debt and ~~the construction loan and~~ Refinanced Loan in the Pier Park North ~~joint venture.~~JV. Borrowing costs, including the discount and issuance costs for the Senior Notes issued by ~~the special purpose entity,~~NFTF, are amortized ~~based~~based on the effective interest method at an effective rate of 4.9%.

Claim ~~settlement~~

Settlement

Claim settlement during the three months ended March 31, 2016 includes $12.5 million for a settlement related to the Deepwater Horizon oil spill. See Note 7,6. Claim Settlement Receivablefor further discussion.

Other, ~~income,~~Net

During the three months ended March 31, 2017, the Company negotiated an insurance settlement that resulted in proceeds of $3.5 million, for reimbursement of certain attorney fees and related costs incurred by the Company in defending shareholder litigation and the SEC investigation which was resolved in October 2015. This amount was included in other, net in the condensed consolidated statements of income.

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 ~~11.4%~~11.8%. Hunting lease income is recognized as income over the term of ~~the~~each lease.

~~17.~~16. Segment Information

The residential real estate segment generates ~~revenues~~revenue from the development and sale of homes and homesites and the sale of parcels of entitled, undeveloped ~~lots.~~land. The commercial real estate segment sells undeveloped or developed land and commercial operating property. The resort and leisure segment generates ~~revenues~~revenue and incurs costs from the WaterColor Inn and Resort, vacation rental ~~programs,~~program, management of The Pearl Hotel, membership sales, restaurants, four golf courses, a beach club, marina operations and other related resort activities. The leasing segment generates ~~revenues~~revenue and costs from leasing retail property, commercial property, cell towers and ~~commercial leasing~~other assets. Leasing operations ~~including~~include properties located in the Company’s consolidated ~~joint venture at~~ Pier Park ~~North.~~North JV and Windmark JV, as well as the Company’s industrial park, VentureCrossings and other properties. The forestry segment produces and sells ~~woodfiber,~~pulpwood, sawtimber and other forest products and may sell the Company’s timber or rural land holdings.

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 ~~(loss)~~ before income taxes and non-controlling interest 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 set forth in Note 2 to the Company’s consolidated financial statements contained in Item 15 of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016. Total ~~revenues represent~~revenue represents sales to unaffiliated customers, as reported in the Company’s condensed consolidated statements of ~~operations.~~income. All significant intercompany accounts and transactions have been ~~eliminated.~~eliminated in consolidation. The caption entitled “Other” consists of mitigation credit revenue and non-allocated corporate general and administrative expenses, net of investment income.

Information by business segment is as follows:


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
Operating Revenues
Operating revenue:
Residential real estate	$	6,988		$	5,411		$	1,275		$	6,988
Commercial real estate	—			—			—			—
Resorts and leisure	8,751			7,803			8,108			8,751
Leasing operations	2,361			2,045			2,384			2,361
Forestry	2,121			1,806			1,350			2,121
Other	33			26			80			33
Total operating revenues	$	20,254		$	17,091
Total operating revenue							$	13,197		$	20,254

Income (loss) before income taxes:
(Loss) income before income taxes:
Residential real estate	$	3,357		$	382		$	(668	)	$	3,357
Commercial real estate	(600		)	(604		)	(576		)	(600		)
Resorts and leisure	(1,800		)	(2,931		)	(1,776		)	(1,800		)
Leasing operations	(43		)	201			203			(43		)
Forestry	1,854			1,637			1,242			1,854
Other	9,030			(1,474		)	8,042			9,030
Total income (loss) before income taxes	$	11,798		$	(2,789	)
Total income before income taxes							$	6,467		$	11,798


	March 31, 2016		December 31, 2015		March 31, 2017		December 31, 2016
Total Assets:
Residential real estate	$	109,456	$	109,791	$	119,119	$	112,220
Commercial real estate	62,702		62,649		60,238		60,150
Resorts and leisure	74,611		75,441		77,797		73,436
Leasing operations	80,763		81,400		85,206		80,863
Forestry	20,085		20,244		21,091		20,664
Other	631,368		633,217		643,993		680,612
Total assets	$	978,985	$	982,742	$	1,007,444	$	1,027,945

~~18.~~17. Commitments and Contingencies

The Company establishes an accrued liability when it believes 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~~loss 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 loss is based upon currently available information and is subject to significant judgment and a variety of assumptions, ~~and~~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 and those described herein. The Company cannot assure 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 which 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 orand a 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’s former paper mill site in Gulf County and certain adjacent properties are subject to various Consent Agreements and Brownfield Site Rehabilitation Agreements with the Florida Department of Environmental Protection (“FDEP”). The paper mill site has been rehabilitated by Smurfit-Stone Container Corporation in accordance with these agreements and a final Site Rehabilitation Completion Order (“SRCO”) issued by the FDEP has been received. The Company is in the process of assessing certain neighboring properties. 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 ~~$2.5~~$1.2 million and $1.3 million as of March 31, ~~2016~~2017 and December 31, ~~2015, including a $1.2 million accrual related to legal costs for the settled SEC investigation as of each such date.~~2016, 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 the 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 in a given period.

The Company has retained certain self-insurance risks with respect to losses for third party liability and property damage, including ~~our~~its timber assets.

At March 31, ~~2016~~2017 and December 31, ~~2015,~~2016, the Company was required to provide surety bonds that guarantee completion of certain infrastructure in certain development projects and mitigation banks of $6.2 million and ~~$7.1 million, respectively, and~~ standby letters of credit ~~in the amount~~ of ~~$0.5~~$0.4 million, ~~as of each such date,~~ which may potentially result in liability to the Company if certain obligations of the Company are not met.

AtAs of March 31, ~~2016,~~2017, the Company ~~has~~had a total of ~~$2.4~~$33.2 million in contractual obligations, all of which ~~$1.8 million~~ are for the remainder of ~~2016, $0.2 million are for 2017 and $0.4 million are for 2018 and thereafter.~~2017.

~~In connection with~~Security on the Refinanced Loan ~~the Company guaranteed the joint venture’s obligations under~~includes a remaining short term ~~$6.6~~$1.3 million letter of ~~credit which is securing a portion of the joint venture’s obligations under the Refinanced Loan.~~credit. See Note 9,9. ~~Real Estate Joint Ventures~~Debt for a further discussion on the Refinanced Loan.

As part of the AgReserves Sale in 2014 and certain sales of timberlands in 2007 and 2008, the Company generated significant tax gains. The installment notes structure allowed the Company to defer the resulting tax liability of $61.8 million until 2022 - 2024 and $69.3 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.

~~19. Concentration of Risks and Uncertainties~~

The Company’s real estate investments are concentrated in Northwest Florida in a number of specific development projects. Uncertain economic conditions could have an adverse impact on the Company’s real estate values and could cause the Company to sell assets at depressed values in order to pay ongoing expenses. Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, investments, notes receivable, other receivables, investments held by special purpose entities, and investments in retained interests. The Company deposits and invests cash with a major financial institution in the United States, which balances exceed the amount of F.D.I.C. insurance provided on such deposits. In addition, as of March 31, 2016, the Company had $184.9 million invested in U.S. Treasury securities and $8.4 million invested in one issuer of corporate debt securities that is non-investment grade. In addition, as of March 31, 2016, the Company had investments in short term commercial paper from eight issuers of $159.0 million.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

We are a real estate development, asset management and operating company with real estate assets currently concentrated primarily between Tallahassee and Destin, Florida, which we predominantly use, or intend to use, for or in connection with, our various residential or commercial real estate developments, resorts and leisure operations, leasing operations orand forestry ~~operations on a limited basis. We have significant residential and commercial land-use entitlements in hand or in process.~~ operations.

We seek higher and better uses for our real estate assets through a range of activities from strategic land planning and development, infrastructure improvements and promoting economic development in the regions where we operate. We have significant residential and commercial land-use entitlements in hand or in process. We may explore the sale of such assets opportunistically or when we believe that we can better deploy those resources.

We believe that our present land holdings and liquidity position can provide us with numerous opportunities to increase recurring revenue and create long-term value for our shareholders by allowing us to focus on our core business activity of real estate development and asset management, including opportunities surrounding the Northwest Florida Beaches International Airport and our other land holdings in Northwest Florida.

Our real estate investment strategy focuses on projects that meet our investment return criteria. The time frame for these expenditures and investments will vary based on the type of project. However, we will only incur such expenditures if our analysis indicates that the project will generate a return equal to or greater than the threshold return over its life. An analysis is conducted for capital expenditures in each of our five segments.

We seek opportunities to invest our funds in ways that could increase our returns. These investments may include longer term commercial or residential real estate or real estate related investments (in which we may play an active or passive role), investments in real estate investments trusts, and other investments in liquid or illiquid securities where we believe we can increase our returns.

Segments

We conduct primarily all of our business in the following five reportable operating segments: 1) residential real estate, 2) commercial real estate, 3) resorts and leisure, 4) leasing operations and 5) forestry.

The following table sets forth the relative contribution of these operating segments to our consolidated operating ~~revenues~~revenue during the three months ended March 31, ~~2016~~2017 and ~~2015.~~2016:


	Three Months Ended March 31,				Three Months Ended March 31,
	2016		2015		2017		2016
Segment Operating Revenues
Segment Operating Revenue
Residential real estate	34.5	%	31.7	%	9.7	%	34.5	%
Commercial real estate	—	%	—	%	—	%	—	%
Resorts and leisure	43.2	%	45.7	%	61.4	%	43.2	%
Leasing operations	11.7	%	12.0	%	18.1	%	11.7	%
Forestry	10.5	%	10.6	%	10.2	%	10.5	%
Other	0.1	%	—	%	0.6	%	0.1	%
Consolidated operating revenues	100.0	%	100.0	%
Consolidated operating revenue					100.0	%	100.0	%

For more information regarding our operating segments, see Note ~~17,~~ 16.Segment Information of our ~~unaudited~~ condensed consolidated financial statements included in this quarterly report.

Residential Real Estate

Our residential real estate segment typically plans and develops ~~mixed-use resort,~~ primary residential and ~~seasonal~~resort residential communities of various sizes, primarily on our existing land. The following is a description of some of our major residential development communities in Northwest Florida that we are currently in the process of planning or developing:

The Watersound Origins communityis a residential community in South Walton County, Florida with direct access to Lake Powell. The project has received government approval for ~~approximately~~ 1,074 ~~single-family~~single family units with an additional multi-family component, however, the actual amount of units that we ultimately approve for development will depend on our development strategy, the extent to which the anticipated returns of the project meets our investment return criteria, and the availability of capital resources to fund such development. The Watersound Origins community includes a six-hole golf course that is operated by our Resorts and Leisure segment.

~~The Breakfast Point community~~ ~~is a residential community in Panama City Beach, Florida. The project has received government approval for 368 single family units,~~ however, the actual amount of units that we ultimately approve for development will depend on our development strategy, the extent to which the anticipated returns of the project meet our investment return criteria, and the availability of capital resources to fund such development. The Watersound Origins community includes a six-hole golf course, which is owned by us and operated by our resorts and leisure segment.

The ~~SouthWood~~Breakfast Point communityis a ~~large scale, mixed use~~residential community ~~located~~ in ~~the southeastern section of Tallahassee.~~Panama City Beach, Florida. The project has received government approval for ~~4,770 residential units, including 2,074~~368 single family ~~residences and 2,696 multi-family units, however,~~units. However, the actual amount of units that we ultimately approve for development will depend on our development strategy, the extent to which the anticipated returns of the project meet our investment return criteria, and the availability of capital resources to fund such development.

The SouthWood community is a large scale, mixed use community located in the southeastern section of Tallahassee, Florida. The project has received government approval for 4,770 residential units, including 2,074 single family residences and 2,696 multi-family units, however, the actual number of units that we ultimately approve for development will depend on our development strategy, the extent to which the anticipated returns of the project meet our investment return criteria, and the availability of capital resources to fund such development. SouthWood also includes ana golf clubhouse, 18-hole golf course ~~and club~~ and a town center with ~~restaurants,~~dining, retail shops and offices. The SouthWood Golf Club is operated by our ~~Resorts~~resorts and ~~Leisure~~leisure segment and a portion of the town center is leased and operated by our ~~Leasing~~leasing segment.

We have other residential communities, such as the SummerCamp Beach, RiverCamps and WindMark Beach communities that have homesites available for sale. In addition, we have residential communities, such as the WaterColor, WaterSound Beach and WaterSound West Beach communities ~~in addition to other communities~~ that are substantially ~~developed. The~~developed and the remaining developed and available homesites in these communities are available for sale.

Our residential real estate segment generates revenue primarily from the sale of developed homesites; the sale of parcels of entitled, undeveloped land; a lot residual on homebuilder sales that provides us a percentage of the sale price of the completed home if the home price exceeds a negotiated threshold; the sale of impact fee credits; marketing fees and other fees on certain transactions. The results of our residential real estate revenue may vary from period to period depending on the communities where lots are sold, as prices vary significantly by community.

~~The Bay-Walton Sector Plan was officially adopted by Bay County~~Our customer base for the sale of developed homesites is primarily focused on homebuilders. Homebuilders generally buy more homesites in a single transaction but tend to buy on a more sporadic basis. As a result, we may experience volatility in the consistency and ~~Walton County~~pace of our residential real estate sales. In addition, the mix of homesites that we currently sell consists mostly of homesites in ~~May 2015~~our primary residential communities which typically have a lower price and ~~was found~~gross margin than homesites in ~~compliance~~our resort residential communities.

Our residential real estate segment incurs cost of revenue primarily from costs directly associated with ~~state law~~the land, development and ~~is therefore in effect~~construction of real estate sold and indirect costs such as ~~of June 2015.~~ development overhead, capitalized interest, marketing, project administration, and selling costs.

The Bay-Walton Sector Plan is a long term master plan that includes entitlements, or legal rights, to develop over 170,000 residential units and over 22 million square feet of retail, commercial, and industrial uses on approximately 110,500 acres of our land holdings. We anticipate a wide range of residential and commercial uses on these land holdings, including some portion of these entitlements serving the active adult retirement market. We believe that there is a growing retirement demographic and that our development experience and the location, size and contiguous nature of our Florida land holdings provide us with strategic opportunities in this demographic. As is true with all of our projects, what will actually be developed will be a function of more detailed planning, analysis and market conditions, which will occur over time.

Our residential real estate segment generates revenues primarily from the sale of developed homesites; the sale of parcels of entitled, undeveloped land; a lot residual on homebuilder sales that provides us a percentage of the sale price of the completed home if the home price exceeds a negotiated threshold; the sale of impact fee credits; marketing fees and other fees on certain transactions.

Our residential real estate segment incurs cost of revenues primarily from costs directly associated with the land, development and construction of real estate sold and indirect costs such as development overhead, capitalized interest, marketing, project administration, and selling costs.

As part of the April 2014 RiverTown real estate sale, the buyer, Mattamy, is obligated to pay impact ~~fees.~~fees to us. Based on Mattamy’s current development plans and St. Johns County’s current costs for impact fees, we estimate that we may receive $20.0 million to $26.0 million for the impact fees over the five-year period following the closing (most of which we expect to receive at the end of that five-year period). However, the actual additional consideration received for the impact fees will be based on a variety of factors outside our control. We received $0.1 million during both the three months ended March 31, 2017 and 2016, and we have received a total of approximately $0.8 million from April 2014 through March 31, 2017.

Commercial Real Estate

In our commercial real estate segment we plan, develop, entitle, manage and ~~entitle~~sell our land holdings for a variety of uses including a broad range of retail, office, hotel, multi-family and ~~industrial uses. We sell land for commercial and light~~ industrial uses. From time to time, our commercial real estate segment also evaluates opportunities to maximize value by selling some of our resorts, leisure or operating properties.

Our commercial real estate segment generates ~~revenues~~revenue from the sale of developed and undeveloped land for retail, office, hotel, multi-family and industrial uses, from the sale of undeveloped land or land with limited development and easements and the sale of commercial operating properties. Our commercial real estate segment incurs costs of ~~revenues from costs~~revenue directly associated with the land, development, construction and selling costs.

Resorts and Leisure

Our resorts and leisure segment ~~generates revenues primarily from the WaterColor Inn~~features a diverse portfolio of vacation rentals and ~~vacation rental programs, four~~a hotel, as well as restaurants, golf courses, ~~marina operations~~a beach club, marinas and other related resort ~~activities.~~

amenities.

WaterColor Inn, Vacation Rentals and Other Management Services - Our WaterColor Inn and vacation rentals generate revenue from (1) the WaterColor Inn and Resort and other management services, (2) our management of The Pearl Hotel, (3) our vacation rental business and (4) our restaurants. The WaterColor Inn incurs expenses from the cost of services and goods provided, personnel costs and third party management fees. ~~Revenues~~Revenue generated ~~for~~from our management services of The Pearl Hotel ~~include~~includes a management fee, fifty percent of certain resort fees and a percentage of The Pearl Hotel’s gross operating profit. Expenses include primarily internal administrative costs. Our vacation rental business generates ~~revenues~~revenue from the rental of private homes and other services, which includes the entire rental fee collected from the customer, including the homeowner’s portion. A percentage of the fee is remitted to the homeowner and presented in the cost of resorts and leisure ~~revenues.~~revenue. The vacation rental business also incurs expenses from asset holding costs and standard lodging personnel, such as front desk, reservations and marketing.

Clubs ~~and Resorts -~~ - Our ~~clubs and resorts~~club operations include our golf courses, beach club and ~~resort~~ facilities that generate ~~revenues~~revenue from ~~memberships,~~membership sales, daily play at ~~those~~our golf courses, ~~that are not part of our St. Joe Club & Resorts,~~ merchandise sales and food and beverage sales and incur expenses from the services provided, maintenance of the golf ~~course~~courses and beach club facilities, personnel costs and third party management fees.

St. Joe Club & Resorts is our private membership club that provides members ~~participating homeowners~~ and ~~their rental~~registered resort guests access to our ~~clubs.~~facilities. The focus is on creating a world class membership experience combined with the ~~all-inclusive~~ aspects of a four star/four diamond resort.

We believe that the access to our facilities by registered resort guests allows us to enjoy a competitive advantage in the lodging business.

Marinas - Our marinas generate ~~revenues~~revenue from boat slip rentals and fuel sales, and incur expenses from cost of services provided, maintenance of the marina facilities, personnel costs and third party management fees.

Leasing Operations

Our leasing operations generate ~~revenues~~revenue from leasing retail ~~and~~property, commercial property, ~~including properties located in our consolidated joint venture at Pier Park North~~cell towers, and ~~our industrial park, VentureCrossings,~~other assets, and incur expenses primarily from maintenance and management of ~~these~~our properties, personnel costs and ~~personnel~~asset holding costs. ~~Our~~Leasing operations include properties located in our consolidated Pier Park North JV and Windmark JV, as well as our industrial park, VentureCrossings and other properties.

Pier Park North. Our leasing operations include our Pier Park North JV, which we developed with Casto, our joint venture ~~also incurs interest~~partner and ~~financing expenses related~~one of the country’s leading developers of neighborhood and community retail centers. The retail center includes 330,000 square feet in Panama City Beach, Florida, of which approximately 10,000 square feet remains to ~~its loan as described~~be developed.

VentureCrossings. We built and own a 105,000 square foot building with manufacturing and office space in ~~Note 9,~~ VentureCrossings and lease the facility under a long-term lease that commenced in 2012. We are currently constructing a new manufacturing facility of approximately 137,000 square feet, which we plan to lease to GKN Aerospace.~~Real Estate Joint Ventures~~.

Forestry

Our forestry segment focuses on the management of our timber holdings in Northwest ~~Florida. We grow~~Florida and ~~sell sawtimber, wood fiber and forest products and provide land management services for conservation properties. We generate~~generates revenue ~~from our forestry segment~~ primarily from open market sales of ~~timber. We sell product~~timber on site without the associated delivery costs. Our forestry segment ~~generates revenues from~~revenue includes the sale of ~~wood fiber,~~pulpwood, sawtimber ~~standing timber~~ and other forest products and ~~conservation land management services. Our forestry segment~~ incurs costs of ~~revenues~~revenue from internal costs of forestry management and property taxes.

Our forestry segment may also generate ~~revenues~~revenue from the sale of our timber holdings, undeveloped land or land with limited development and easements. Costs incurred as part of a sale of these lands may include the cost of timber, land, minimal development costs and selling costs.

Critical Accounting Estimates

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

Critical accounting policies that we believe reflect our more significant judgments and estimates used in the preparation of our consolidated financial statements are set forth in Item 7 of our Annual Report on Form 10-K for the year ended December 31, ~~2015.~~2016. There have been no significant changes in these policies during the first three months of ~~2016,~~2017, however we cannot assure you that these policies will not change in the future.

Recently Adopted and Issued Accounting Pronouncements

See Note 12. Summary of Significant Accounting Policies to our ~~unaudited~~ condensed consolidated financial statements included in this report for recently issued or adopted accounting standards, including the date of adoption and effect on our condensed consolidated financial statements.

Seasonality

Our ~~businesses~~business may be affected by seasonal fluctuations. For example, ~~revenues~~revenue from our resorts and leisure operations are typically higher in the second and third quarters; however, they can vary depending on the timing of holidays and school breaks, including spring break.

In addition to the seasonality effect described above, ~~variability in our results of operations is further heightened by the change in our customer mix in~~ our residential real estate business ~~from some retail sales, which have a more consistent flow of revenues, to~~is predominantly sales to homebuilders, who tend to buy multiple lots in sporadic ~~transactions.~~transactions, which impacts the variability in our results of operations. In addition, the results of our residential real estate revenue may vary from period to period depending on the communities where lots are sold, as prices vary significantly by community. Our commercial real estate projects are likewise subject to one-off sales and the development of specific projects depending on demand. These variables have caused, and may continue to cause, our operating results to vary significantly from period to period.

Results of Operations

Consolidated Results

The following table sets forth a comparison of the results of our operations for the three months ended March 31, ~~2016~~2017 and ~~2015~~.2016.

Three Months Ended
March 31,
2016
2015
In millions
Revenues:
Real estate sales $ 7.1
$ 5.4
Resorts and leisure revenues 8.7
7.8
Leasing revenues 2.4
2.1
Timber sales 2.1
1.8
Total 20.3
17.1
Expenses:
Cost of real estate sales 1.8
3.1
Cost of resorts and leisure revenues 9.3
8.8
Cost of leasing revenues 0.8
0.7
Cost of timber sales 0.2
0.2
Other operating and corporate expenses 6.8
7.1
Depreciation, depletion and amortization 2.3
2.9
Total expenses 21.2
22.8
Operating loss (0.9 ) (5.7 )
Other income (expense):

Investment income, net 2.7

5.2
Interest expense (3.0 )
(2.9 )
Claim settlement 12.5
—
Other, net 0.5
0.6
Total other income 12.7

2.9
Income (loss) before income taxes 11.8
(2.8 )
Income tax (expense) benefit (3.2 ) 1.1
Net income (loss) $ 8.6
$ (1.7 )



	Three Months Ended March 31,
	2017			2016
	In millions
Revenue:
Real estate revenue	$	1.5		$	7.1
Resorts and leisure revenue	8.1			8.7
Leasing revenue	2.4			2.4
Timber revenue	1.2			2.1
Total	13.2			20.3
Expenses:
Cost of real estate revenue	0.3			1.8
Cost of resorts and leisure revenue	8.8			9.3
Cost of leasing revenue	0.7			0.8
Cost of timber revenue	0.2			0.2
Other operating and corporate expenses	6.2			6.8
Depreciation, depletion and amortization	1.9			2.3
Total expenses	18.1			21.2
Operating loss	(4.9		)	(0.9		)
Other income (expense):
Investment income, net	10.4			2.7
Interest expense	(3.0		)	(3.0		)
Claim settlement	—			12.5
Other, net	4.0			0.5
Total other income, net	11.4			12.7
Income before income taxes	6.5			11.8
Income tax expense	(2.3		)	(3.2		)
Net income	$	4.2		$	8.6

Real Estate ~~Sales~~Revenue and Gross Profit.

Three Months Ended March 31,
2016
% ⁽¹⁾
2015
% ⁽¹⁾
Dollars in millions
Revenues:
Residential real estate sales $ 7.0
98.6 % $ 5.4
100.0 %
Other rural land sales 0.1
1.4 % —
— %
Real estate sales $ 7.1
100.0 % $ 5.4
100.0 %

Gross profit:
Residential real estate sales $ 5.2
74.3 % $ 2.3
42.6 %
Other rural land sales 0.1
100.0 % —
— %
Gross profit $ 5.3
74.6 % $ 2.3
42.6 %



	Three Months Ended March 31,
	2017		% ⁽¹⁾		2016		% ⁽¹⁾
	Dollars in millions
Revenue:
Residential real estate revenue	$	1.3	86.7	%	$	7.0	98.6	%
Commercial real estate revenue	—		—	%	—		—	%
Rural land and other revenue	0.2		13.3	%	0.1		1.4	%
Real estate revenue	$	1.5	100.0	%	$	7.1	100.0	%

Gross profit:
Residential real estate revenue	$	1.0	76.9	%	$	5.2	74.3	%
Commercial real estate revenue	—		—	%	—		—	%
Rural land and other revenue	0.2		100.0	%	0.1		100.0	%
Gross profit	$	1.2	80.0	%	$	5.3	74.6	%



⁽¹⁾	Calculated percentage of total real estate ~~sales~~revenue and the respective gross ~~profit~~margin percentage.

Real Estate ~~Sales.~~ Revenue and Gross Profit. During the three months ended March 31, ~~2016,~~2017, residential real estate ~~sales increased $1.6~~revenue decreased $5.7 million, or ~~29.6%~~81.4%, to $1.3 million as compared to $7.0 million during the same period in ~~2015, primarily due~~2016, and gross profit decreased $4.2 million, or 80.8%, to ~~a $3.4~~$1.0 million, ~~unimproved land sale and~~(or gross margin of 76.9%), as compared to $5.2 million, (or gross margin of 74.3%), during the ~~mix of homesites sold~~same period in ~~our primary home communities, partially offset by a reduction in sales in our resort home communities due to lower homesite availability.~~2016. During the three months ended March 31, 2017, we sold 2 lots compared to 22 lots during the same period in 2016, due to the timing of builder contractual closing obligations and the timing of development of finished lots in our primary residential communities. The revenue and gross profit for each period was impacted by the volume of sales within each of the communities and variance in pricing among the communities. Included in the residential real estate revenue for the three months ended March 31, ~~2015,~~2016, is a $3.4 million unimproved land sale with a gross profit of $3.3 million due to a low historical basis.

Commercial Real Estate Revenue and Gross Profit. Revenue from commercial real estate can vary drastically from period to period depending on the proximity to developed areas and mix of commercial real estate sold in each period, with varying compositions of retail, office, industrial and other commercial uses. During the three months ended March 31, 2017 and 2016, there were no commercial real estate sales.

~~Our customer base~~Rural Land and Other Revenue and Gross Profit. During the three months ended March 31, 2017, we sold approximately 43 acres of rural and timber land for residential real estate sales is shifting from being primarily retail based to being more weighted towards homebuilders. Homebuilders generally buy more homesites in a single transaction but tend to buy on a more sporadic basis,$0.2 million and ~~we believe we will continue to experience greater volatility in~~mitigation bank credits for less than $0.1 million. During the consistency and pace of our residential real estate sales. In addition, as the mix of homesites that we sell has shifted to homesites in our primary communities, which typically have a lower price and gross profit margin than homesites in our resort communities, we may experience a decrease in our gross profit margin from residential real estate sales.

~~During~~three months ended March 31, 2016, we sold approximately 94 acres of rural and timber land for $0.1 million. ~~Revenues~~Revenue from rural land ~~and commercial real estate~~ can vary drastically from period to period.

~~Real Estate Sales Gross Profit~~. During the three months ended March 31, 2016, gross profit was $5.3 million, or 74.6%, as compared to $2.3 million or 42.6% during the same period in 2015. During the three months ended March 31, 2016, the $3.4 million unimproved land sale had a gross profit of $3.3 million due to a low historical basis and residential real estate gross margins increased due to the mix of sales from different communities. Our gross ~~profit~~ margin can vary significantly from period to period depending on the ~~type~~characteristics of property sold. Sales of rural and timber land typically have a lower basis than residential and commercial real estate sales. In addition, our basis in residential and commercial real estate can vary depending on the amount of development or other costs spent on the property.

~~Resorts~~For additional information see the Segment Results sections for Residential Real Estate, Commercial Real Estate and ~~Leisure Revenues and Gross Deficit~~Forestry.

Three Months Ended March 31,
2016
2015
Dollars in millions
Resorts and leisure revenues $ 8.7
$ 7.8
Gross deficit $ (0.6 ) $ (1.0 )
Gross margin (6.9 )% (12.8 )%

Resorts and Leisure Revenue and Gross Deficit



	Three Months Ended March 31,
	2017			2016
	In millions
Resorts and leisure revenue	$	8.1		$	8.7
Gross deficit	$	(0.7	)	$	(0.6	)
Gross margin	(8.6		)%	(6.9		)%

Resorts and leisure ~~revenues increased $0.9~~revenue decreased $0.6 million, or ~~11.5%~~6.9%, during the three months ended March 31, ~~2016,~~2017, as compared to the same period in ~~2015,~~2016. The decrease in resorts and leisure revenue is due to ~~an increase~~a decrease of $0.9 million in ~~average~~ room ~~rates at both~~rentals, vacation rentals and resort fees due to the ~~WaterColor Inn~~timing of holiday and ~~in the vacation rental programs, along with an increase in the vacation rental program room nights rented. In addition, we have experienced an increase in vacation rental homes occupied of 7.5% as~~school breaks compared to the same period in ~~2015. Revenues~~2016, partially offset by an increase of $0.2 million in club revenue related to an increase in membership sales, along with an increase in marina revenue of $0.1 million. Revenue from our resorts and leisure operations are typically higher in the second and third quarters; however, they can vary depending on the timing of holidays and school breaks, including spring break. Resorts and leisure had a negative gross ~~deficit~~ margin during the three months ended March 31, ~~2016 and~~2017 of (8.6)% compared to a negative gross margin of (6.9)% during the three months ended March 31, ~~2015,~~2016, due to the seasonality of these revenues, as noted above, and related fixed costs. ~~Our~~

Leasing Revenue and Gross Profit



	Three Months Ended March 31,
	2017			2016
	In millions
Leasing revenue	$	2.4		$	2.4
Gross profit	$	1.7		$	1.6
Gross margin	70.8		%	66.7		%

Leasing revenue and gross ~~deficit~~profit was essentially flat for each of the three month periods ended March 31, 2017 and 2016.

Timber Revenue and Gross Profit



	Three Months Ended March 31,
	2017			2016
	In millions
Timber revenue	$	1.2		$	2.1
Gross profit	$	1.0		$	1.9
Gross margin	83.3		%	90.5		%

Timber revenue decreased $0.9 million, or 42.9%, during the three months ended March 31, 2017, as compared to the same period in 2016, primarily due to a decrease in the amount of tons sold and price decreases due to fluctuations in market supply and regional mill outages. There were 75,000 tons sold during the three months ended March 31, 2017, as compared to 106,000 tons sold during the same period in 2016. Gross margin ~~has~~ decreased during the three months ended March 31, ~~2016, primarily due~~2017 to ~~the continued increase in club memberships, higher average lodging rates and ancillary revenues~~83.3%, as compared to 90.5% during the same period in ~~2015.~~2016, due to fluctuations in market supply and regional mill outages.

~~Leasing Revenues~~Other Operating and ~~Gross Profit~~Corporate Expenses.

Three Months Ended March 31,
2016
2015
Dollars in millions
Leasing revenues $ 2.4
$ 2.1
Gross profit $ 1.6
$ 1.4
Gross margin 66.7 % 66.7 %



	Three Months Ended March 31,
	2017		2016
	In millions
Employee costs	$	1.8	$	1.7
401(k) contribution	1.2		1.4
Property taxes and insurance	1.4		1.5
Professional fees	1.0		1.4
Marketing and owner association costs	0.4		0.3
Occupancy, repairs and maintenance	0.1		0.2
Other	0.3		0.3
Total other operating and corporate expenses	$	6.2	$	6.8

~~Leasing revenues increased $0.3~~Other operating and corporate expenses decreased by $0.6 million, or ~~approximately 14.3%~~8.8%, during the three months ended March 31, ~~2016,~~2017, as compared to the same period in ~~2015. The increase in revenues is primarily due to the commencement of revenues from new store openings in our Pier Park North joint venture.~~

~~Timber Sales and Gross Profit~~.

Three Months Ended March 31,
2016
2015
Dollars in millions
Timber sales $ 2.1
$ 1.8
Gross profit $ 1.9
$ 1.6
Gross margin 90.5 % 88.9 %

Timber sales increased $0.3 million, or 16.7%, during the three months ended March 31, 2016 as compared to the same period in 2015, primarily due to an increase in the amount of tons sold. Tons sold were 106,000 during the three months ended March 31, 2016, as compared to tons sold of 96,000 during the three months ended March 31, 2015.

~~Other operating and corporate expenses.~~ Other operating and corporate expenses decreased by $0.3 million, or 4.2%, during the three months ended March 31, 2016, as compared to the same period in 2015. For the three months ended March 31, 2016 and 2015, other operating and corporate expenses included expenses related to the 401(k) plan contribution of $1.4 million and $0.9 million, respectively.2016. The decrease in other operating and corporate expenses ~~net~~is primarily due to a decrease in professional fees of ~~the increase~~$0.4 million.

Depreciation, Depletion and Amortization

The decrease of $0.4 million in ~~the 401(k) plan contribution, was $0.8 million or 12.8%~~depreciation, depletion and amortization expenses during the three months ended March 31, ~~2016,~~2017, as compared to the same period in ~~2015.~~2016, was primarily due to operating assets being fully depreciated.

Investment Income, Net

~~Investment income, net.~~ Investment income, net primarily includes (i) interest and dividends earned, (ii) accretion of the net discount, (iii) realized gain from the sale of our available for-sale-investments less other-than-temporary impairment loss, (iv) interest income earned on the time deposit held by ~~the Buyer~~an SPE and ~~(iv)~~(v) interest earned on mortgage notes ~~receivable.~~receivable and other receivables as detailed in the table below:


	Three Months Ended March 31,				Three Months Ended March 31,
	2016		2015		2017			2016
	In millions				In millions
Net investment income from available-for-sale securities
Interest and dividend income	$	0.2	$	2.3	$	4.6		$	0.2
Accretion income	0.5		0.6		0.9			0.5
Realized gain on the sale of investments					3.1			—
Other-than-temporary impairment loss					(0.4		)	—
Total net investment income from available-for-sale securities	0.7		2.9		8.2			0.7
Interest income from investments in special purpose entities	2.0		2.0
Interest accrued on notes receivable	—		0.3
Interest income from investments in SPEs					2.1			2.0
Interest accrued on notes receivable and other interest					0.1			—
Total investment income, net	$	2.7	$	5.2	$	10.4		$	2.7

Investment income, net ~~decreased $2.5~~increased $7.7 million ~~during~~to $10.4 million for the three months ended March 31, ~~2016,~~2017 as compared to $2.7 million for the three months ended March 31, 2016. The increase in interest and dividend income for the three months ended March 31, 2017 as compared to the same period in ~~2015,~~2016 is primarily due to ~~a decrease~~changes in our investment portfolio including cash equivalents. As of ~~$2.2 million from~~March 31, 2017, our ~~available-for-sale securities.~~portfolio included 35.8% corporate bonds, 11.1% preferred stock and 0.5% common stock. As of March 31, 2016, our portfolio included 49.6% U.S. Treasury Bills, 2.3% corporate bonds and ~~2015,~~0.1% preferred stock. The returns on the ~~investments balance was $193.5 million~~corporate bonds and ~~$385.4 million, respectively. As of~~preferred stock are higher than the returns on the U.S. Treasury Bills. Investment income, net for the three months ended March 31, ~~2016~~2017 also includes the sale of certain corporate debt securities and ~~2015, the balance~~preferred stock at a realized gain of ~~commercial paper included within cash and cash equivalents was $159.0~~$3.1 million, ~~and $248.4~~partially offset by an other-than-temporary impairment loss of $0.4 million ~~respectively. The decrease in commercial paper and investments from March 31, 2015 to March 31, 2016 primarily~~ related to the ~~repurchase of common stock during 2015 and 2016.~~credit-related component.

Interest ~~expense.~~ Expense

Interest expense primarily includes interest expense on our CDD assessments, the Senior Notes issued by NFTF ~~in April 2014 in connection with the AgReserves Sale~~ and the ~~construction loan and~~ Refinanced Loan for our consolidated Pier Park North ~~joint venture.~~JV as detailed in the table below:


	Three Months Ended March 31,				Three Months Ended March 31,
	2016		2015		2017		2016
	In millions				In millions
Interest expense and amortization of discount and issuance costs for Senior Notes issued by special purpose entity	$	2.2	$	2.2
Interest expense and amortization of discount and issuance costs for Senior Notes issued by SPE					$	2.2	$	2.2
Interest expense	0.8		0.7		0.8		0.8
Total interest expense	$	3.0	$	2.9	$	3.0	$	3.0

Claim Settlement

~~Claim settlement.~~ Claim settlement consists of $12.5 million for the three months ended March 31, 2016 due to a settlement related to the Deepwater Horizon oil spill. See Note 6.Claim Settlement Receivable for further discussion.

Other, Net

~~Income tax expense/benefit.~~ ~~We recorded~~Other, net primarily includes income ~~tax~~from our retained interest investments, hunting lease income, insurance settlement proceeds and other income and expense ~~of $3.2~~items as detailed in the table below:



	Three Months Ended March 31,
	2017		2016
	In millions
Accretion income from retained interest investments	$	0.1	$	0.2
Hunting lease income	0.3		0.2
Miscellaneous income, net	3.6		0.1
Other, net	$	4.0	$	0.5

Other, net increased $3.5 million during the three months ended March 31, ~~2016,~~2017, as compared to the same period in 2016. During the three months ended March 31, 2017, we negotiated an insurance settlement that resulted in proceeds of $3.5 million for reimbursement of certain attorney fees and related costs incurred by us in defending shareholder litigation and the SEC investigation which was resolved in October 2015.

Income Tax Expense

We recorded income tax ~~benefit~~expense of ~~$1.1~~$2.3 million during the three months ended March 31, 2017, as compared to $3.2 million during the same period in ~~2015.~~2016. Our effective tax rate was ~~27.2%~~34.3% for the three months ended March 31, ~~2016,~~2017, as compared to ~~(38.5)%~~27.2% during the same period in ~~2015.~~2016.

These effective tax rates differ from the U.S. Federal statutory rate of 35% primarily due to the effect of the lower timber rate of 23.8%, impact of state taxes, changes in the valuation allowance and changes in permanent book to tax differences. In the future, we expect that our effective rate will be closer to the statutory rate.

Segment Results

Residential Real Estate

Our residential real estate segment typically plans and develops ~~mixed-use~~primary residential and resort ~~primary and seasonal~~ residential communities of various sizes, primarily on our existing land. We own land in Northwest Florida, including Gulf of Mexico beach frontage and waterfront properties, concentrated primarily between Tallahassee and Destin, Florida.

The table below sets forth the results of operations of our residential real estate segment for the three months ended March 31, ~~2016~~2017 and 2016: ~~and 2015~~:

Three Months Ended March 31,
2016
2015
In millions
Revenues:
Real estate sales $ 6.5
$ 5.2
Other revenues 0.5
0.2
Total revenues 7.0
5.4
Expenses:
Cost of real estate sales and other revenues 1.8
3.1
Other operating expenses 1.4
1.8
Depreciation and amortization 0.1
0.2
Total expenses 3.3
5.1
Operating income 3.7
0.3
Other (expense) income (0.3 ) 0.1
Net income before income taxes $ 3.4
$ 0.4



	Three Months Ended March 31,
	2017			2016
	In millions
Revenue:
Real estate revenue	$	1.0		$	6.5
Other revenue	0.3			0.5
Total revenue	1.3			7.0
Expenses:
Cost of real estate and other revenue	0.3			1.8
Other operating expenses	1.3			1.4
Depreciation and amortization	0.1			0.1
Total expenses	1.7			3.3
Operating (loss) income	(0.4		)	3.7
Other expense, net	(0.3		)	(0.3		)
Net (loss) income before income taxes	$	(0.7	)	$	3.4

Real estate ~~sales include~~revenue includes sales of homes, homesites and other residential land and certain lot residuals from homebuilder sales that provide us a percentage of the sale price of the completed home if the home price exceeds a negotiated threshold. Other revenue includes brokerage fees, marketing fees and impact fee credits sold. Cost of real estate ~~sales~~revenue includes direct costs (e.g., development and construction costs), selling costs and other indirect costs (e.g., development overhead, capitalized interest and project administration costs). ~~Other operating expenses include non-recurring expenses related to planning of the Bay-Walton Sector Plan. Other revenues include brokerage fees, marketing fees and impact fee credits sold.~~

Three Months Ended March 31, ~~2016~~2017 Compared to the Three Months Ended March 31, ~~2015~~2016

The following table sets forth our residential real estate ~~sales~~revenue and cost of ~~sales~~revenue activity by property type:


	Three Months Ended March 31, 2016									Three Months Ended March 31, 2015									Three Months Ended March 31, 2017									Three Months Ended March 31, 2016
	Units Sold	Revenues		Cost of Sales		Gross Profit		Gross Margin		Units Sold	Revenues		Cost of Sales		Gross Profit		Gross Margin		Units Sold	Revenue		Cost of Revenue		Gross Profit		Gross Margin		Units Sold	Revenue		Cost of Revenue		Gross Profit		Gross Margin
	(Dollars in millions)																		Dollars in millions
Primary homesites																			1	$	0.5	$	0.1	$	0.4	80.0	%	19	$	2.1	$	1.0	$	1.1	52.4	%
Resort homesites	3	$	1.0	$	0.4	$	0.6	60.0	%	7	$	2.9	$	1.2	$	1.7	58.6	%	1	0.5		0.1		0.4		80.0	%	3	1.0		0.4		0.6		60.0	%
Resort home	—	—		—		—		—	%	1	0.8		0.8		—		—	%
Primary homesites	19	2.1		1.0		1.1		52.4	%	49	1.5		0.9		0.6		40.0	%
Land sale	N/A	3.4		0.1		3.3		97.1	%	N/A	—		—		—		—	%	N/A	—		—		—		—	%	N/A	3.4		0.1		3.3		97.1	%
Total	22	$	6.5	$	1.5	$	5.0	76.9	%	57	$	5.2	$	2.9	$	2.3	44.2	%	2	$	1.0	$	0.2	$	0.8	80.0	%	22	$	6.5	$	1.5	$	5.0	76.9	%

~~Resort~~Primary homesites ~~and resort home.~~ ~~Revenues~~. Revenue from ~~resort~~primary homesite sales decreased ~~$1.9~~$1.6 million, or ~~65.5%~~76.2%, during the three months ended March 31, ~~2016,~~2017, as compared to the same period in ~~2015,~~2016, due to the timing of builder contractual closing obligations and the timing of development of finished lots in our primary residential communities such as ~~we continue to reduce~~ the ~~number of resort homesites we have available for sale.~~Watersound Origins, Breakfast Point and SouthWood communities. Gross ~~profit margins increased to 60.0%~~margin was 80.0% during the three months ended March 31, ~~2016,~~2017, as compared to ~~58.6%~~52.4% during the same period in ~~2015,~~2016, primarily due to the ~~mix~~timing of ~~homesites sold during each respective period and~~ the receipt of lot residuals during 2017 that have no related ~~costs~~cost at the time of recognition.

~~Primary homesites.~~ Resort homesites~~Revenues~~. Revenue from ~~primary~~resort homesite sales ~~increased $0.6~~decreased $0.5 million, or ~~40.0%~~50.0%, during the three months ended March 31, ~~2016,~~2017, as compared to the same period in ~~2015,~~2016, due to a decrease of available homesites. During the ~~timing of sales in our Watersound Origins, Breakfast Point,~~three months ended March 31, 2017 and ~~Southwood communities.~~2016, the average revenue per resort homesite sold was approximately $0.4 million and $0.3 million, respectively. Gross ~~profit~~ margin increased to ~~52.4%~~80.0% during the three months ended March 31, ~~2016,~~2017, as compared to ~~40.0%~~60.0% during the same period in ~~2015,~~2016, primarily due to price increases and the mix of homesites sold during each respective period and the timing of the receipt of lot residuals that have no related ~~costs~~cost at the time of recognition.

Land ~~sales. D~~sales~~uring~~. During the three months ended March 31, 2016, we had a sale of approximately 111 acres of unimproved residential land for $3.4 million resulting in a gross margin of $3.3 million.

Other operating expenses include salaries and benefits, property taxes, marketing, professional fees, project administration, support personnel, owner association and CDD assessments and other administrative expenses. ~~Other operating expenses decreased $0.4 million during the three months ended March 31, 2016, as compared to the same period in 2015, primarily due to decreases in personnel costs.~~

During the three months ended March 31, ~~2016~~2017 and ~~2015,~~2016, we capitalized less than $0.1 million of indirect development costs related to our residential development projects.

~~For the three months ended March 31, 2016, other~~Other expense, net primarily consists of CDD interest expense, ~~on our CDD assessments,~~ partially offset by ~~interest earned on our mortgage notes receivable. For the three months ended March 31, 2015,~~ other ~~income primarily consists of interest earned on our mortgage notes receivable, partially offset by interest expense on our CDD assessments.~~

miscellaneous income.

Commercial Real Estate

Our commercial real estate segment plans, develops, entitles and sells our land holdings ~~often in conjunction with strategic partners,~~ for a broad range of retail, office, hotel, multi-family and industrial uses. From time to time, our commercial real estate segment may also sell properties in our resort and leisure or leasing operations segments. The timing of commercial real estate ~~revenues~~revenue can vary depending on the demand, size and location of the property.

~~The table below sets forth the results of operations of our commercial real estate segment for~~For both the three months ended March 31, ~~2016~~2017 and ~~2015~~:

Three Months Ended March 31,
2016
2015
In millions
Revenues:
Real estate sales $ —
$ —
Expenses:
Cost of real estate sales —
—
Other operating expenses 0.6
0.6
Total expenses 0.6
0.6
Operating loss (0.6 ) (0.6 )
Other expense —
—
Net loss before income taxes $ (0.6 ) $ (0.6 )

~~Three Months Ended~~2016, there was no commercial real estate revenue or cost of real estate revenue. For both the three months ended March 31, 2017 and 2016, ~~Compared to the Three Months Ended March 31, 2015~~

other operating expenses were $0.6 million and net loss before income taxes was $0.6 million.

Commercial ~~land sales~~real estate revenue can vary depending on the proximity to developed areas and the mix and characteristics of commercial ~~land~~real estate sold in each period, with varying compositions of retail, office, ~~light~~ industrial and other commercial uses. During the three months ended March 31, ~~2016~~2017 and ~~March 31, 2015,~~2016, there were no commercial real estate sales. ~~However,~~As our focus continues to evolve more towards recurring revenue from leasing operations, we expect to have limited activity during the ~~second half~~remainder of ~~2016.~~2017.

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

Resorts and Leisure

Our resorts and leisure segment includes recurring ~~revenues~~revenue from our resorts and leisure operations. Resorts and leisure ~~revenues~~revenue and cost of resorts and leisure ~~revenues~~revenue include results of operations from the WaterColor Inn, ~~and~~ vacation rental ~~programs,~~program, restaurants, four golf courses, a beach club, marina operations, membership sales, other management services, including management of The Pearl Hotel and other related resort activities.

The table below sets forth the results of operations of our resorts and leisure segment for the three months ended March 31, ~~2016~~2017 and ~~2015~~: 2016:


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
	In millions						In millions
Revenues:
Resorts and leisure revenues	$	8.7		$	7.8
Revenue:
Resorts and leisure revenue							$	8.1		$	8.7
Expenses:
Cost of resorts and leisure revenues	9.3			8.8
Cost of resorts and leisure revenue							8.8			9.3
Other operating expenses	0.1			0.1			0.1			0.1
Depreciation	1.1			1.8			1.0			1.1
Total expenses	10.5			10.7			9.9			10.5
Net loss before income taxes	$	(1.8	)	$	(2.9	)	$	(1.8	)	$	(1.8	)

Three Months Ended March 31, 2017Compared to theThree Months Ended March 31, 2016

The following table sets forth ~~the detail~~details of our resorts and leisure ~~revenues~~revenue and cost of ~~revenues:~~revenue:


	Three Months Ended March 31, 2016							Three Months Ended March 31, 2015							Three Months Ended March 31, 2017							Three Months Ended March 31, 2016
	Revenues		Gross (Deficit) Profit			Gross Margin		Revenues		Gross (Deficit) Profit			Gross Margin		Revenue		Gross (Deficit) Profit			Gross Margin		Revenue		Gross (Deficit) Profit			Gross Margin
	Dollars in millions														In millions
Resorts, vacation rentals and other management services	$	5.7	$	(0.6	)	(10.5	)%	$	5.0	$	(1.0	)	(20.0	)%	$	4.8	$	(0.8	)	(16.7	)%	$	5.7	$	(0.6	)	(10.5	)%
Clubs	2.6		(0.1		)	(3.8	)%	2.3		(0.1		)	(4.3	)%	2.8		—			—	%	2.6		(0.1		)	(3.8	)%
Marinas	0.4		0.1			25.0	%	0.5		0.1			20.0	%	0.5		0.1			20.0	%	0.4		0.1			25.0	%
Total	$	8.7	$	(0.6	)	(6.9	)%	$	7.8	$	(1.0	)	(12.8	)%	$	8.1	$	(0.7	)	(8.6	)%	$	8.7	$	(0.6	)	(6.9	)%

~~Three Months Ended March 31, 2016 Compared to the Three Months Ended March 31, 2015~~

~~Revenues~~Revenue from resorts, vacation rentals and other management services ~~increased $0.7~~decreased $0.9 million, or ~~14.0%~~15.8%, during the three months ended March 31, ~~2016,~~2017, as compared to the same period in ~~2015,~~2016, primarily due to ~~an increase~~a decrease in ~~average~~ room ~~rates at both the WaterColor Inn~~rentals, vacation rentals and ~~in our vacation rental program and~~resort fees due to the timing of ~~Spring Break with~~holiday and school breaks compared to the ~~Easter holiday~~same period in 2016.

Revenue from our clubs increased $0.2 million, or 7.7%, during the ~~first quarter. Vacation rentals experienced an increase in room nights rented and higher average rates. This resulted in an increase in vacation rental homes occupied~~three months ended March 31, 2017, as compared to the same period in ~~2015. Revenues from our clubs increased $0.3 million, or 13.0%~~2016, primarily related to an increase in membership sales.

Our negative gross margin was (8.6)% during the three months ended March 31, ~~2016,~~2017, as compared to a negative gross margin of (6.9)% during the same period in ~~2015, primarily~~2016, due to ~~a continued increase in total members, growth in rounds played at~~ the ~~golf courses by non-members, including our resort guests,~~seasonality of these revenues, as noted above, and ~~a strong showing by our food and beverage component at the clubs, which experienced increased weddings and special events as compared to the same period in 2015.~~

Our gross margin has increased during the three months ended March 31, 2016, primarily due to additional homes and occupancy in our vacation rental business, lower costs and increased membership revenues in 2016 as compared to the same period in 2015.related fixed costs.

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

Leasing Operations

Our leasing operations segment includes recurring ~~revenues~~long term rental revenue from ~~our~~ retail operations, commercial operations, cell towers, and ~~commercial leasing operations,~~other assets, including properties located in our consolidated ~~joint venture at~~ Pier Park ~~North.~~North JV and Windmark JV, and our industrial park, VentureCrossings.

The table below sets forth the results of operations of our leasing operations segment for the three months ended March 31, ~~2016~~2017 and ~~2015~~: 2016:


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
	In millions						In millions
Revenues:
Leasing revenues	$	2.4		$	2.1
Revenue:
Leasing revenue							$	2.4		$	2.4
Expenses:
Cost of leasing revenues	0.8			0.7
Cost of leasing revenue							0.7			0.8
Other operating expenses	0.3			0.2			0.2			0.3
Depreciation	0.8			0.8			0.8			0.8
Total expenses	1.9			1.7			1.7			1.9
Operating income	0.5			0.4			0.7			0.5
Other expense	(0.5		)	(0.2		)
Other expense, net							(0.5		)	(0.5		)
Net income before income taxes	$	—		$	0.2		$	0.2		$	—

The total net rentable square feet and percentage leased of commercial leasing properties by location at March 31, 2017 and December 31, 2016 are as follows:



		March 31, 2017			December 31, 2016
	Location	Net Rentable Square Feet	Percentage Leased		Net Rentable Square Feet	Percentage Leased
Pier Park North JV	Bay County, FL	320,305	93	%	320,305	93	%
VentureCrossings	Bay County, FL	105,000	100	%	105,000	100	%
Windmark JV ⁽¹⁾	Gulf County, FL	48,035	21	%	48,035	21	%
SouthWood Town Center	Leon County, FL	34,412	86	%	34,412	86	%
WaterColor Town Center ⁽²⁾	Walton County, FL	22,532	100	%	22,532	100	%
Port St. Joe Commercial	Gulf County, FL	18,107	100	%	18,107	100	%
Beach Commerce Park	Bay County, FL	14,700	93	%	14,700	100	%
SummerCamp Commercial	Franklin County, FL	13,000	—	%	13,000	—	%
WaterSound Gatehouse	Walton County, FL	12,624	94	%	12,624	90	%
395 Office building	Walton County, FL	6,700	100	%	6,700	100	%
Wetappo	Gulf County, FL	4,900	100	%	4,900	100	%
WaterColor Crossings	Walton County, FL	2,520	49	%	2,520	49	%
WaterSound Origins	Walton County, FL	760	100	%	760	100	%
		603,595	86	%	603,595	87	%



(1)	Included in net rentable square feet as of March 31, 2017 and December 31, 2016, is 13,808 square feet of unfinished space.
(2)	In addition to net rentable square feet there is also space that we occupy or serves as common area.

Three Months Ended March 31, ~~2016~~2017 Compared to the Three Months Ended March 31, ~~2015~~2016

~~Revenues from~~Cost of leasing ~~operations increased $0.3 million, or 14.3%, during~~revenue and expenses were essentially flat for each of the three ~~months~~month periods ended March 31, 2017 and 2016. As of March 31, 2017, we had approximately 604,000 of net rentable square feet, of which approximately 522,000 square feet was under lease. As of March 31, 2016, ~~as compared to the same period in 2015. The increase in revenues is primarily attributable to an increase in revenues from leases in our Pier Park North joint venture.~~we had approximately 589,000 of net rentable square feet, of which approximately 494,000 square feet was under lease.

Other operating expenses include property taxes, insurance, professional fees, marketing, project administration and other administrative expenses.

Other expense, ~~increased $0.3 million for the three months ended March 31, 2016, as compared to the same period in 2015,~~net primarily ~~due to~~includes interest expense from the Pier Park North ~~joint venture~~JV Refinanced Loan.

During the three months ended March 31, 2017, we capitalized less than $0.1 million of indirect development costs related to our commercial leasing development projects. During the three months ended March 31, 2016, ~~we capitalized~~ no indirect development costs related to ~~Pier Park North and less than $0.1 million during the three months ended March 31, 2015~~.our commercial leasing development projects were capitalized.

Forestry

Our forestry segment focuses on the management of our timber holdings. We grow and sell ~~timber~~pulpwood, sawtimber and ~~wood fiber and provide land management services for conservation properties.~~other forest products. Our forestry segment may also sell our timber holdings, undeveloped land or land with limited development and easements.

The table below sets forth the results of operations of our forestry segment for the three months ended March 31, ~~2016~~2017 and ~~2015.~~2016.


	Three Months Ended March 31,				Three Months Ended March 31,
	2016		2015		2017		2016
	In millions				In millions
Revenues:
Timber sales	$	2.1	$	1.8
Real estate sales - Other rural land sales	0.1		—
Total revenues	2.2		1.8
Revenue:
Timber revenue					$	1.2	$	2.1
Real estate revenue - Other rural land revenue					0.2		0.1
Total revenue					1.4		2.2
Expenses:
Cost of timber sales	0.2		0.2
Cost of timber revenue					0.2		0.2
Other operating expenses	0.2		0.1		0.1		0.2
Depreciation and depletion	0.2		0.2		0.2		0.2
Total expenses	0.6		0.5		0.5		0.6
Operating income	1.6		1.3		0.9		1.6
Other income	0.3		0.3
Other income, net					0.3		0.3
Net income before income taxes	$	1.9	$	1.6	$	1.2	$	1.9

The total tons sold and relative percentage of total tons sold by major type of timber ~~sale~~revenue for the three months ended March 31, ~~2016~~2017 and ~~2015~~2016 are as follows:


	Three Months Ended March 31,						Three Months Ended March 31,
	2016			2015			2017			2016
Pine pulpwood	74,000	69.8	%	58,000	60.4	%	53,000	70.7	%	74,000	69.8	%
Pine sawtimber	25,000	23.6	%	27,000	28.1	%	17,000	22.7	%	25,000	23.6	%
Pine grade logs	5,000	4.7	%	9,000	9.4	%	4,000	5.3	%	5,000	4.7	%
Other	2,000	1.9	%	2,000	2.1	%	1,000	1.3	%	2,000	1.9	%
Total	106,000	100.0	%	96,000	100.0	%	75,000	100.0	%	106,000	100.0	%

Three Months Ended March 31, ~~2016~~2017 Compared to the Three Months Ended March 31, ~~2015~~2016

~~Revenues from timber sales increased~~Timber revenue decreased by ~~approximately $0.3~~$0.9 million, or ~~16.7%~~42.9%, during the three months ended March 31, ~~2016,~~2017, as compared to the same period in ~~2015,~~2016, primarily due to ~~an increase~~a decrease in ~~prices and~~ the amount of tons ~~sold. Gross margin increased~~sold and price decreases due to fluctuations in market supply and regional mill outages. There were 75,000 tons sold during the three months ended March 31, ~~2016, to 90.5%,~~2017, as compared to ~~88.9%~~106,000 tons sold during the same period in ~~2015.~~2016. The average price per ton sold decreased to $15.54 during the three months ended March 31, 2017, as compared to $19.40 during the same period in 2016. Gross margin decreased during the three months ended March 31, 2017, to 83.3%, as compared to 90.5% during the same period in 2016, primarily due to fluctuations in market supply and regional mill outages.

During the three months ended March 31, 2017, we sold approximately 43 acres of rural and timber land for $0.2 million. During the three months ended March 31, 2016, we sold approximately 94 acres of rural and timber land for $0.1 million.

Other operating expenses include salaries and benefits, property taxes, professional fees and other administrative expenses. Other income consists primarily of income from hunting ~~leases.~~leases and fill dirt sales.

Liquidity and Capital Resources

As of March 31, ~~2016,~~2017, we had cash and cash equivalents of ~~$201.3~~$217.0 million, compared to ~~$212.8~~$241.1 million as of December 31, ~~2015.~~2016. Our cash and cash equivalents at March 31, ~~2016~~2017 includes commercial paper of ~~$159.0~~$157.4 million, short term U.S. Treasuries of $25.0 million and ~~$20.3~~$12.5 million of money market funds. In addition to cash and cash equivalents, we consider our investments classified as available-for-sale securities, ~~especially our investments in U.S. Treasury securities,~~ as being generally available to meet our liquidity needs. Securities classified as available-for-sale ~~securities~~ are not as liquid as cash and cash equivalents, but they are generally convertible into cash within a relatively short period of time. As of March 31, ~~2016,~~2017, we had ~~investments in U.S. Treasuries of $184.9 million,~~ investments in corporate debt securities of ~~$8.4~~$132.8 million, preferred stock investments of $41.0 million and common stock investments of $1.8 million. As of December 31, 2016, we had investments in corporate debt securities of $139.1 million and preferred stock investments of ~~$0.2~~$36.6 million. As of March 31, 2017, of the $132.8 million ~~as compared to investments in U.S. Treasuries of $184.7 million, investments in corporate debt securities of $6.3 million and preferred stock investments of $0.2 million as of December 31, 2015. The~~ corporate debt securities and $41.0 million preferred stock, ~~are~~$8.5 million and $0.1 million, respectively, were issued by Sears Holdings Corp or affiliates, of which Messrs. Berkowitz and Alvarez are ~~non-investment grade.~~on the Board of Directors, and which may be deemed an affiliate of FCM, or us.

Fairholme Capital Management, L.L.C., or one of its affiliates (“Fairholme Capital”) has served as our investment advisor since April 2013. Fairholme Capital receives no compensation for services to us. As of March 31, 2016, the funds managed by Fairholme Capital beneficially owned approximately 32.3% of our common stock. Mr. Bruce R. Berkowitz is ~~the Managing Member of Fairholme Capital and~~ the Chairman of our Board of Directors. He is the Manager of, and controls entities that own and control, Fairholme Holdings, LLC, which wholly owns FCM and FTC. Mr. Berkowitz is the Chief Investment Officer of FCM, and the Chief Executive Officer and a director of FTC. Since April 2013, FCM has provided investment advisory services to us directly, or more recently, as the sub-advisor to FTC. Neither FCM nor FTC receives any compensation for services as our investment advisor. As of March 31, 2017, clients of FCM and FTC beneficially owned approximately 33.75% of our common stock. FCM and its client the Fairholme Fund, a Series of the Fairholme Funds, Inc., are affiliates of ours.

Both Mr. Cesar Alvarez and Mr. Howard Frank are members of our Board of Directors and also serve as directors of the Fairholme Funds, Inc. Mr. Alvarez is also a director of FTC.

Pursuant to the terms of the ~~Investment Management~~ Agreement, ~~with Fairholme Capital, as amended (the “Agreement”), Fairholme Capital~~FTC agreed to supervise and direct the investments of an investment ~~account~~accounts established by us in accordance with the investment guidelines and restrictions approved by the Investment Committee of the our Board of Directors. The investment guidelines are set forth in the Agreement and require that, as of the date of any investment: (i) ~~at least 50% of the investment account be held in cash or cash equivalents, as defined in the Agreement, (ii)~~ no more than 15% of the investment account may be invested in securities of any one issuer (excluding the U.S. Government) ~~and (iii)~~, (ii) any investment in any one issuer (excluding the U.S. Government) that exceeds 10%, but not 15%, requires the consent of at least two members of the Investment ~~Committee. The~~Committee, (iii) 25% of the investment account ~~may not~~must be held in cash or cash equivalents, (iv) the investment account is permitted to be invested in common equity securities; however, common stock ~~securities.~~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 our 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 our investment portfolio at the time of purchase.

We believe that our current cash position and our anticipated cash flows from cash equivalents, short term investments and cash generated from operations will provide us with sufficient liquidity to satisfy our anticipated working capital needs, expected capital expenditures, ~~and~~ principal and interest payments on our long term debt, and authorized stock repurchases for the next twelve months.

During the three months ended March 31, ~~2016,~~2017, we incurred a total of ~~$1.9~~$7.5 million for capital expenditures, which includes ~~$0.3~~$1.6 million related to the ~~Pier Park North joint venture, which is included in our leasing operations segment, $0.9 million related to the~~acquisition and development of our residential and commercial real estate projects, ~~$0.3~~$3.9 million for our leasing segment (which includes $0.5 million related ~~primarily~~to the Pier Park North JV), $1.4 million related to our resorts and leisure segment and ~~$0.4~~$0.6 million related primarily to our forestry segment and ~~other segments.~~corporate expenditures.

Our remaining budgeted capital expenditures for ~~2016~~2017 are estimated to be ~~$21.3~~$55.8 million, which includes ~~$16.6~~$27.6 million primarily for the development and acquisition of land for our residential and commercial real estate projects, ~~$0.4~~$22.3 million for our ~~commercial~~ leasing segment, ~~$3.0~~$5.0 million for our resorts and leisure segment and ~~$1.3~~$0.9 million for our forestry segment and ~~other segments.~~corporate expenditures. A portion of this spending is discretionary and will only be spent if we believe the risk adjusted return warrants the expenditures.

In October 2015, the Pier Park North ~~joint venture~~JV refinanced its construction loan and entered into a $48.2 million loan. As of March 31, 2017 and December 31, 2016, $47.9 million and $48.1 million, respectively, was outstanding on the Refinanced Loan. The Refinanced Loan accrues interest at a rate of 4.1% per annum and matures in November 2025. In connection with the Refinanced Loan, we entered into a limited guarantee in favor of the lender, based on our percentage ownership of the joint venture. In addition, the guarantee can become full recourse in the case of any fraud or intentional misrepresentation by the Pier Park North ~~joint venture;~~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 or insolvency proceedings and upon breach of covenants in the security instrument. See Note 9,8. Real Estate Joint Ventures.

CDD bonds financed the construction of infrastructure improvements in some of our projects. The principal and interest payments on the bonds are paid by assessments on ~~or from sales proceeds of,~~ the properties benefited by the improvements financed by the bonds. We have recorded a liability for CDD assessments that ~~are~~is associated with platted property, which is the point at which the assessments become fixed or determinable. Additionally, we have recorded a liability for the balance of the CDD ~~assessment~~assessments that is associated with unplatted property if it is probable and reasonably estimable that we will ultimately be responsible for repaying. We have recorded CDD related debt of ~~$7.1~~$7.7 million ~~related to CDD debt~~ as of March 31, ~~2016.~~2017. Our total outstanding CDD assessments were ~~$22.5~~$22.6 million at March 31, ~~2016,~~2017, which was comprised of ~~$18.5~~$18.8 million at SouthWood, ~~$3.1~~$3.0 million at the existing Pier Park retail center, $0.7 million at Wild Heron, and $0.1 million at ~~Rivercrest~~Rivercrest.

During the three months ended March 31, 2017 and ~~less than $0.1~~2016, we repurchased 2,044,981 and 995,650 shares, respectively, of our common stock at an average purchase price of $16.70 and $14.88, per share, respectively, for an aggregate purchase price of $34.2 million ~~at NatureWalk.~~

and $14.8 million, respectively, pursuant to our Stock Repurchase Program. As of ~~January 1, 2016,~~March 31, 2017, we had a total authority of ~~$205.7~~$156.8 million available for purchase of shares of our common stock pursuant to our Stock Repurchase Program. In the first quarter of 2016, we repurchased 995,650 shares of our common stock at an average stock price of $14.88 per share, for an aggregate purchase price of $14.8 million pursuant to our Stock Repurchase Program. As of March 31, 2016, we had a total authority of $190.9 million remaining available for purchase of shares under our Stock Repurchase Program. We may repurchase our common stock in open market purchases from time to time, in privately negotiated transactions or otherwise, pursuant to Rule 10b-18 under 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 other factors. 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 our Board of Directors at any time in its sole discretion. During the period from April 1, 2017 through May 1, 2017, we purchased an additional 327,963 shares for an aggregate purchase price of $5.6 million.

Summary of Cash Flows

A summary of our cash flows from operating, investing and financing for the three months ended March 31, ~~2016~~2017 and ~~2015~~2016 are as follows:


	Three Months Ended March 31,					Three Months Ended March 31,
	2016			2015		2017			2016
	(In millions)					In millions
Net cash provided by operating activities	$	4.4		$	1.1	$	7.1		$	4.4
Net cash (used in) provided by investing activities	(1.0		)	251.9
Net cash (used in) provided by financing activities	(14.9		)	2.2
Net (decrease) increase in cash and cash equivalents	(11.5		)	255.2
Net cash provided by (used in) investing activities						2.6			(1.0		)
Net cash used in financing activities						(33.8		)	(14.9		)
Net decrease in cash and cash equivalents						(24.1		)	(11.5		)
Cash and cash equivalents at beginning of the period	212.8			34.5		241.1			212.8
Cash and cash equivalents at end of the period	$	201.3		$	289.7	$	217.0		$	201.3

Cash Flows from Operating Activities

Cash flows from operating activities include costs related to assets ultimately planned to be sold, including residential real estate development and related amenities, sales of timberlands or undeveloped and developed land, our forestry operations and land developed by the commercial real estate segment. Net cash provided by operations was ~~$4.4~~$7.1 million during the three months ended March 31, ~~2016,~~2017, as compared to ~~$1.1~~$4.4 million during the same period in ~~2015.~~2016.

Cash Flows from Investing Activities

Cash flows provided by (used in) ~~provided by~~ investing activities primarily includes purchases and sales of investments, investments in assets held by ~~special purpose entities, capital expenditures incurred by our Pier Park North joint venture for property to be held and used in the joint venture’s operations~~SPEs and capital expenditures for property and equipment used in our operations. During the three months ended March 31, ~~2016,~~2017, net cash ~~flows used in~~provided by investing activities ~~were $1.0~~was $2.6 million, which includes ~~our total net sales, maturities and~~ purchases of investments of $49.5 million, sales of investments of $57.0 million and maturities of assets held by SPEs of $0.4 million. During the three months ended March 31, ~~2015,~~2016, net cash ~~flows provided by~~used in investing activities ~~were $251.9~~was $1.0 million, which includes ~~our total net sales, maturities and~~ purchases of investments of ~~$254.6~~$9.3 million, sales of investments of $8.5 million and maturities of assets held by SPEs of $0.4 million.

~~During~~ Capital expenditures for property and equipment were $5.3 million and $0.6 million, during the three months ended March 31, 2017 and 2016, capital expenditures incurred by our Pier Park North joint venture were $0.3 million, which were reported in our leasing operations segment and capital expenditures for other property and equipment were $0.3 million,respectively, which were primarily for our resorts and leisure ~~segment. During the three months ended March 31, 2015, capital expenditures incurred by our Pier Park North joint venture were $1.7 million, which were reported in our~~and leasing operations ~~segment and capital expenditures for other property and equipment were $0.9 million, which were primarily for our resorts and leisure segment.~~

segments.

Cash Flows from Financing Activities

Net cash used in financing activities was ~~$14.9~~$33.8 million during the three months ended March 31, ~~2016~~2017, compared to net cash ~~provided by~~used in financing activities of ~~$2.2~~$14.9 million for the three months ended March 31, ~~2015, primarily a result of~~2016. Net cash used in financing activities during the three months ended March 31, 2017 included the repurchase of common stock ~~in 2016, compared to~~of $34.2 million and principal payments on debt of $0.2 million, partially offset by borrowings on the ~~Pier Park North construction loan in 2015.~~Construction Loan of $0.5 million. During the three months ended March 31, 2016 ~~$14.8~~$14.8 million was used for the repurchase of our common stock.

Off-Balance Sheet Arrangements

In October 2015, the Pier Park North ~~joint venture~~JV refinanced its construction loan and entered into a $48.2 million loan. As of March 31, 2017 and December 31, 2016, $47.9 million and $48.1 million, respectively, was outstanding on the Refinanced Loan. The Refinanced Loan accrues interest at a rate of 4.1% per annum and matures in November 2025. The Refinanced Loan ~~provides~~provided for interest only payments during the first twelve months and principal and interest payments thereafter with a final balloon principal payment at maturity of the Refinanced Loan. The Refinanced Loan is secured by a first lien on, and security interest in, a majority of Pier Park North ~~joint venture’s~~JV’s property and a remaining short term ~~$6.6~~$1.3 million letter of credit. In connection with the Refinanced Loan, we entered into a limited guarantee and are required to comply with a financial covenant as described in Note 9,8. Real Estate Joint Ventures.

~~During~~As part of a timberland sale in 2007 and 2008, ~~and 2007,~~ we sold 132,055 acres of timberland in exchange for fifteen year installment notes receivable in the aggregate amount of $183.3 million. The installment notes are fully backed by irrevocable letters of credit issued by Wachovia Bank, N.A. (now a subsidiary of Wells Fargo & Company). We contributed the installment notes to bankruptcy remote qualified special purpose entities. The entities’ financial condition and financial results are not consolidated in our financial statements.

During 2008 and 2007, the entities monetized $183.3 million of installment notes by issuing debt securities to third party investors equal to approximately 90% of the value of the installment notes. Approximately $163.0 million in net proceeds were distributed to us during 2008 and 2007. The debt securities are payable solely out of the assets of the entities and proceeds from the letters of credit. The investors in the entities have no recourse against us for payment of the debt securities or related interest expense. We have recorded a retained interest with respect to ~~all entities~~notes contributed to bankruptcy-remote qualified SPEs of ~~$10.3~~$10.8 million for all installment notes monetized through March 31, ~~2016.~~2017. This balance represents the present value of future cash flows to be received over the life of the installment notes, using management’s best estimates of underlying assumptions, including credit risk and interest rates as of the date of the monetization, plus the accretion of investment income based on an effective yield, which is recognized over the term of the notes, less actual cash receipts. We continue to update the expectation of cash flows to be collected over the term of the notes. Changes to the previously projected cash flows are accounted for prospectively, unless based on management’s assessment of current information and events, it is determined that there is an other-than-temporary impairment. We have not recorded an other-than-temporary impairment during the three months ended March 31, 2016.

At March 31, ~~2016~~2017 and December 31, ~~2015, the Company was~~2016, we were required to provide surety bonds that guarantee completion of certain infrastructure in certain development projects and mitigation banks of $6.2 million and ~~$7.1 million, respectively and~~ standby letters of credit ~~in the amount~~ of ~~$0.5~~$0.4 million, ~~as of each such date,~~ which may potentially result in liability to ~~the Company~~us if certain obligations ~~of the Company~~ are not met.

Contractual Obligations

There were no material changes outside the ordinary course of our business in our contractual obligations during the first quarter of ~~2016.~~2017.

Forward-Looking Statements

This quarterly report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These statements concern expectations, beliefs, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. Specifically, this quarterly report contains forward-looking statements regarding:

our expectations concerning our future business strategy, ~~and our intent to seek higher and better uses for~~including exploring the sale of our real estate ~~assets;~~assets opportunistically or when we believe that we can better deploy those resources;

our expectations regarding available opportunities provided to us by our liquidity position to increase growth and recurring revenue and to create long-term shareholder value;

our 2017 capital expenditures budget and the timing of benefits of these investments;

our expectations regarding levels of commercial real estate sales activity during the remainder of 2017;

our plan to enter into a lease with GKN Aerospace;

our beliefs regarding growth in the retirement demographic and the strategic opportunities provided to us by such growing retirement demographic;

our expectations regarding the wide range of residential and commercial uses of our Bay-Walton Sector Plan land holdings, including to serve the active adult retirement market;

our beliefs concerning the volatility in the consistency and pace of our residential real estate sales, the type of buyers interested in our residential real estate, and the mix of homesites that will be available for sale and the related effect on our gross profit margins;

~~our expectations regarding levels of commercial real estate sales activity during the second half of 2016;~~

our expectations regarding the amount and timing of the impact fees which we will receive in connection with the RiverTown Sale;

our expectation regarding our liquidity or ability to satisfy our working capital needs, expected capital expenditures and principal and interest payments on our long term debt;

our estimates and assumptions regarding the installment notes and the Timber Note; and

our expectation regarding the impact of pending litigation, claims, other disputes or governmental proceedings, on our cash flows, financial condition or results of ~~operations; and~~

~~our expectations regarding the sufficiency of the Pension Plan’s surplus assets to fund future benefits to 401(k) Plan participants.~~operations.

These forward-looking statements reflect our current views about future events and are subject to risks, uncertainties and assumptions. We wish to caution readers that certain important factors may have affected and could in the future affect our actual results and could cause actual results to differ significantly from those expressed in any forward-looking statement. The most important factors that could prevent us from achieving our goals, and cause the assumptions underlying forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements include, but are not limited to, those risk factors and disclosures set forth in our Form 10-K for the year ended December 31, ~~2015,~~2016, and subsequent, Form 10-Qs and other current reports, and the following:

any changes in our strategic objectives and our ability to successfully implement such strategic objectives;

any potential negative impact of our longer-term property development strategy, including ~~losses~~loss and negative cash flows for an extended period of time if we continue with the self-development of ~~recently granted~~our entitlements;

our ability and the ability of our investment advisor to identify and acquire suitable investments for our investment portfolio that meet our risk and return criteria;

significant decreases in the market value of our investments in securities or any other investments;

our ability to capitalize on strategic opportunities presented by a growing retirement demographic;

our ability to accurately predict market demand for the range of potential residential and commercial uses of our real estate, including our Bay-Walton Sector holdings;

~~changes~~volatility in ~~our customer base~~the consistency and ~~the mix~~pace of ~~homesites available for sale in~~ our residential real ~~estate;~~estate revenue;

economic or other conditions that affect the future prospects for the Southeastern region of the United States and the demand for our products, including a slowing of the population growth in Florida, inflation, or unemployment rates or declines in consumer confidence or the demand for, or the prices of, housing;

any downturns in real estate markets in Florida or across the nation;

our dependence on the real estate industry and the cyclical nature of our real estate operations;

the impact of natural or man-made disasters or weather conditions, including hurricanes and other severe weather conditions, on our business;

our ability to successfully and timely obtain land use entitlements and construction financing, maintain compliance with state law requirements and address issues that arise in connection with the use and development of our land, including the permits required for mixed-use and active adult communities;

our ability to enter into a lease with GKN Aerospace on favorable terms or at all;

changes in laws, regulations or the regulatory environment affecting the development of real estate;

our ability to effectively deploy and invest our assets, including our available-for-sale securities;

our ability to effectively manage our real estate assets, as well as the ability of our joint venture partner to effectively manage the day-to-day activities of the Pier Park North JV;

our ability to realize the anticipated benefits of our acquisitions, joint ~~venture;~~ventures, investments in leasable spaces and operations and share repurchases;

our ability to carry out our Stock Repurchase Program in accordance with applicable securities laws;

our ability to successfully estimate the amount and timing of the impact fees we will receive in connection with the RiverTown Sale;

increases in operating costs, including costs related to real estate taxes, owner association fees, construction materials, labor and insurance and our ability to manage our cost structure;

the sufficiency of our current cash position, anticipated cash flows from cash equivalents and short term investments and cash generated from operations to satisfy our anticipated working capital needs, capital expenditures and principal and interest payments;

our ability to anticipate the impact of pending environmental litigation matters or governmental proceedings on our financial condition or results of operations;

the expense, management distraction and possible liability associated with litigation, claims, other disputes or governmental proceedings;

potential liability under environmental or construction laws, or other laws or regulations;

our ability to receive payments of settlement amounts due under our claims settlement receivable; and

our ability to successfully estimate the impact of certain accounting and tax matters that arise from the installment notes and the Timber ~~Note; and~~

~~the performance of the surplus assets in the Pension Plan may not be what we expected.~~Note.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risks primarily from interest rate risk fluctuations. We have investments in corporate debt securities, certain preferred stock and common stock that have fixed interest rates for which changes in interest rates generally affect the fair value of the investment, but not the earnings or cash flows. A hypothetical 100 basis point increase in interest rates would result in a decrease of approximately $5.3 million in the market value of our available-for-sale securities as of March 31, 2017. Any realized gain or loss resulting from such interest rate changes would only occur if we sold the investments prior to maturity. In addition, our investments in corporate debt securities are non-investment grade, which could affect their fair value and could materially impact our results of operations if a decline in their value is determined to be other-than-temporary. A hypothetical 100 basis point increase in interest rates would result in a decrease of approximately $0.5 million in the market value of our available-for-sale securities as of March 31, 2016. Any realized gains or losses resulting from such interest rate changes would only occur if we sold the investments prior to maturity.

Our cash and cash equivalents are invested in ~~demand deposit and~~commercial paper, money market ~~instruments.~~instruments and short term U.S. Treasury securities. Changes in interest rates related to these investments would not significantly impact our results of operations. The amount of interest earned on one of our retained interest investments is based on LIBOR. A 100 basis point change in the interest rate may result in an insignificant change in interest earned on the investment.

The amount of interest expense on our Construction Loan is based on LIBOR. A 100 basis point change in the interest rate may result in an insignificant change in interest expense.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and ~~Procedures.~~Procedures. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial ~~Reporting.~~Reporting. During the quarter ended March 31, ~~2016~~2017, there were no changes in our internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II - OTHER INFORMATION

Item 1.Legal Proceedings

We are subject to a variety of litigation, claims, other disputes and governmental proceedings that arise from time to time in the ordinary course of our business, none of which we believe will have a material adverse effect on our consolidated financial position, results of operations or liquidity.

In addition, we are subject to 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 which have been previously sold. Refer to Note ~~18,~~ 17.Commitments and Contingencies, for further discussion.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information on our repurchases of common stock during the three months ended March 31, ~~2016:~~2017:

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
In Millions
January 1-31, 2016 13,800
$ 14.99
13,800
$ 205.5
February 1-29, 2016 981,850
14.87
981,850
190.9
March 1-31, 2016 —
—
—
—
Total 995,650
$ 14.88
995,650
$ 190.9



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1)
					In Millions
January 1-31, 2017	—	$	—	—	$	—
February 1-28, 2017	—	—		—	—
March 1-31, 2017	2,044,981	16.70		2,044,981	156.8
Total	2,044,981	$	16.70	2,044,981	$	156.8



(1)	In November 2015, we announced that our Board authorized an additional $200.0 million for stock repurchases under our Stock Repurchase Program. As of December 31, ~~2015,~~2016, we had a total of ~~$205.7~~$190.9 million available for purchase of shares under our Stock Repurchase Program. The Stock Repurchase Program has no expiration date.

Item 6. Exhibits

Exhibit Index



Exhibit Number		Description
*31.1		Certification by Jorge Gonzalez, President, Chief Executive Officer and Director, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
*31.2		Certification by Marek Bakun, Executive Vice President and Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
**32.1		Certification by Jorge Gonzalez, President, Chief Executive Officer and Director, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**32.2		Certification by Marek Bakun, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
**101.INS		XBRL Instance Document.
**101.SCH		XBRL Taxonomy Extension Schema Document.
**101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
**101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
**101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
**101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.



*	Filed herewith.



**	Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		THE ST. JOE COMPANY

Date:	May ~~5, 2016~~4, 2017	/s/ Jorge Gonzalez
		Jorge Gonzalez
		President, ~~and~~ Chief Executive Officer and Director


Date:	May ~~5, 2016~~4, 2017	/s/ Marek Bakun
		Marek Bakun
		Executive Vice President and Chief Financial Officer

5155



	Common Stock				Retained Earnings		Accumulated Other Comprehensive Loss
	Outstanding Shares		Amount		Retained Earnings		Accumulated Other Comprehensive Loss			Treasury Stock			Non-controlling Interest			Total
Balance at December 31, 2015	75,329,557		$	892,387	$	78,851	$	(686	)	$	(305,289	)	$	8,184		$	673,447
Net income (loss)	—		—		8,665		—			—			(111		)	8,554
Other comprehensive loss	—		—		—		(54		)	—			—			(54		)
Repurchase of common shares	(995,650	)	—		—		—			(14,820		)	—			(14,820		)
Balance at March 31, 2016	74,333,907		$	892,387	$	87,516	$	(740	)	$	(320,109	)	$	8,073		$	667,127



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Debt securities:
U.S. Treasury securities	$	184,930	$	19	$	—	$	184,949
Corporate debt securities	9,546		11		1,117		8,440
Preferred stock	265		—		117		148
	194,741		30		1,234		193,537
Restricted investments:
Money market fund	5,651		—		—		5,651
	$	200,392	$	30	$	1,234	$	199,188



	As of March 31, 2016								As of December 31, 2015
	Less Than 12 Months				12 Months or Greater				Less Than 12 Months				12 Months or Greater
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Debt securities:
U.S. Treasury securities	$	—	$	—	$	—	$	—	$	184,740	$	79	$	—	$	—
Corporate debt securities	8,251		1,117		—		—		6,292		981		—		—
Preferred stock	148		117		—		—		208		57		—		—
	$	8,399	$	1,234	$	—	$	—	$	191,240	$	1,117	$	—	$	—



	Unrealized Losses on Available-for-Sale Securities			Total
Accumulated other comprehensive loss at December 31, 2015	$	(686	)	$	(686	)
Other comprehensive loss	(54		)	(54		)
Accumulated other comprehensive loss at March 31, 2016	$	(740	)	$	(740	)



	Three Months Ended March 31, 2016
	Before-Tax Amount			Tax Benefit or (Expense)		Net-of-Tax Amount
Unrealized losses on available-for-sale investments	$	(88	)	$	34	$	(54	)