JOE 10-K & 10-Q changes, risk factors and insider trading

This annualForm report10-K contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. These statements include, among other things, information about possible or assumed future results of the business and our financial condition, liquidity, results of operations, plans, strategies, prospects and objectives. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar expressions concerning matters that are not historical facts. The Company cautions that its forward-looking statements involve risks and uncertainties, and while we believe that our expectations for the future are reasonable in view of currently available information, you are cautioned not to place undue reliance on our forward-looking statements. All business decisions involve assessing known risks. However, some risks may be unknown with changing socio-economic, market conditions and interest rates. Estimates are used to assess, among other things, capital allocation decisions. Actual results or events may differ materially from estimates and those indicated in our forward-looking statements as a result of various important factors. Such factors include, but are not limited to, those discussed below.

We may not be able to successfully implement our business strategy. Our business strategy consists of developing our residential real estate and expanding the scope of our hospitality assets and services, our commercial portfolio of income producing properties and our other ventures to build recurring revenues and enhance enterprise value, while always maintaining sufficient enterprise liquidity. Our strategy also includes operating a portion of our business through JVs. Management may fail in assessing risks related to our strategy, profitably maintaining and growing operations and allocating capital. We may also face risks from unidentified issues not discovered in due diligence ofin our operations and investments. Management may fail in estimating and most efficiently allocating cash in excess of operational and strategic investment needs, including to shareholders by dividends and the repurchase of common stock.

Management may also fail to accurately forecast financial results, and, as a result, actual results may vary greatly from management estimates. As of December 31, 2024,2025, we had approximately $1,040.4$1,004.9 million of real estate investments, $66.5$66.1 million of investment in unconsolidated joint ventures and $59.1$41.3 million of property and equipment, net recorded on our books at depreciated cost basisbasis, subject to impairment testing. If market conditions were to deteriorate, our estimate of undiscounted future cash flows may fall below their carrying value and we may be required to take impairments, which would have an adverse effect on our results of operations and financial condition. Existing and planned operations utilize estimates of revenue, costs, profits, growth, and real estate market values.

We face significant competition across our business units. We compete with local, regional and national real estate leasing and development companies and homebuilders, some of which may have greater financial, marketing, sales and other resources than we do. Hospitality operations are subject to significant competition from other hospitality providers and lodging alternatives. Our ability to remain competitive and to attract new and repeat guests, customers and club members depends on our success in distinguishing the quality and value of our products and services from those offered by others. Competition from real estate leasing and development companies and homebuilders may adversely affect our ability to attract tenants and lease our commercial, multi-family and senior living properties, attract purchasers and sell residential homesiteshomesites, homes and commercial real estate and attract and retain experienced real estate sales, leasing and development personnel. Labor markets in the industries in which we operate are also competitive, which have led to increased labor costs in recent years. We must attract, train and retain a large number of qualified employees while controlling related labor costs. In addition, we face competition for tenants from other retail shopping centers and commercial facilities, as well as for our multi-family and senior living communities. There can be no assurance we will be able to compete successfully against current or future competitors or that competitive pressures will not have a material adverse effect on our business, results of operations, cash flows and financial condition.

A decline in general economic conditions, particularly in our primary market locations, could lead to reduced consumer demand for our products and services. Demand for our products and services is sensitive to changes in economic conditions over which we have no control, including the level of employment, consumer confidence, consumer income, consumer discretionary spending, consumer preferences, inflation, the availability of financing, changes in fiscal monetary policy and interest rate levels. In addition, the real estate market is subject to downturns, and our business is especially sensitive to economic conditions in Northwest Florida, where our developments and assets are located, and, more broadly, the Southeast region of the U.S.,United States (“U.S.”), which in the past has produced a high percentage of customers for our products. If market conditions experience volatility or worsen, tenant and other customers’ demand may materially decline. For example, over the past several years, we have faced macroeconomic headwinds caused by, among other things, overall consumer confidence, inflation, elevated interest rates, higher insurance costs,costs supplyfor chain disruptions, financial institution disruptionsconsumers and geopoliticaluncertainty conflicts,over tariffs, all of which impacted buyer sentiment. While demand across our segments remained strong despite these challenges, our business was impacted from the aforementioned macroeconomic factors, which have extended homesite and home deliveries in certain residential communities and increased operating costs. Although these delays generally have not resulted in increased cancellation rates, and therefore only impacted the timing of revenue recognition of our homesites, if conditions worsenworsen, orsuch demand declines, we could experience cancellations thatconditions could adversely impact our business.business and our ability to successfully execute our business strategy.

Additionally, we and the real estate industry in general may be adversely affected during periods of high inflation, primarily because of higher construction and operating costs. While the rate of inflation has moderated, it has remained persistent in the U.S. due, in part, to supply chain issues, elevated energy prices, labor shortages and trade policies, among other factors. As a result, we cannot predict whether such inflationary conditions will continue or the impact it will have on customer preferences and demand.

Our leasing projects are subject to a variety of risks that could impact returns. Our business strategy includes the development and leasing of multi-family and senior living properties, management of commercial properties and commercial assets for sale.lease. These commercial developments may not be as successful as estimated due to leasing related risks, including the risk that we may not be able to lease new properties, obtain lease rates that are consistent with our projections or achieve targeted occupancy levels within expected timeframes as well as the risks generally associated with real estate development. Senior living properties in particular face challenges such as longer lease-up periods, specialized staffing requirements, and the need to establish and maintain a strong reputation in the local market. Additionally, development of leasing projects involves the risk associated with the significant time lag between commencement and completion of the project. This time lag subjects us to greater risks relating to, among other things:

We face risks stemming from our strategic partnerships. We currently maintain, and in the future may seek additional strategic partnerships, including the formation of JVs, to develop real estate or to pursue other business activities, capitalize on the potential of our residential, hospitality and commercial opportunities and maximize the value of our assets. Certain of these JVs may be material to our business. For example, forin the years ended December 31, 2025, 2024 and 2023, our equity in income from the unconsolidated Latitude Margaritaville Watersound JV accounted for over 20% of our pre-tax income. This concentration in a single JV means that any adverse changes affecting this project, whether from market conditions, issues with our joint venture partner, or project-specific challenges, could have a disproportionate impact on our overall financial performance, even if our other operations perform as expected.

We face risks associated with short-term U.S. Treasury Bills. We hold significant cash balances that are invested in a variety of short-term U.S. Treasury BillsBills, currently classified as cash equivalents, that are intended to preserve principal value and maintain a high degree of liquidity. We have exposure to credit risk associated with our short-term U.S. Treasury Bills and these instruments are subject to price fluctuations as a result of changes in the financial market’s assessment of issuer credit quality, increases in delinquency and default rates, changes in prevailing interest rates and other economic factors.

Additionally, we have historically been exposed, and in the future may again be exposed, to credit risk associated with investments – debt securities (“Securities”), which are also subject to such fluctuations. A downgrade of the U.S. government’s credit rating may also decrease the value of any future investments in Securities. The market value of such potential future investments will be subject to change from period-to-period, especially in light of the political landscape, financial institution disruptions and geopolitical conflictsconflicts, instabilities or tensions, which have caused market volatility. Our Securities have historically included, and in the future may again include, investments in U.S. Treasury Bills classified as investments – debt securities. Credit-related impairment losses can negatively affect earnings. Investments in securitiesSecurities and funds are not insured against loss of principal. Under certain circumstances we may be required to redeem all or part of any future investment, which may result in a loss.

The construction and building industry, similar to many other industries, havehas experienced, and may continue to experience worldwide supply chain disruptions and cost increases due to a multitude of factors, including inflation, elevated interest rates, higher insurance costs,costs tariffs,for consumers, rapidly evolving trade and tariff policies and disputes, labor shortages and geopolitical conflicts.conflicts, instabilities and tensions. Materials, parts and labor costs have increased in recent years, sometimes significantly and over a short period of time. In addition, material time delays or increases in construction costs resulting from the aforementioned factors may impact our ability to realize anticipated returns on such projects, impact the timing of revenue recognition, lead to cancellations and otherwise materially adversely affect our business, results of operations, cash flows and financial condition. Nonetheless, should we experience increased cancellations as a result of such macroeconomic factors, our business could be adversely impacted.

Further, with regard to our residential segment, revenues from homesite sales can fluctuate period-to-periodsignificantly from period to period due to variations in the mix of sales from different communities, as well as other variations in product mix. Given these fluctuations in product mix, revenues from our residential segment may significantly vary from period to period.

Mortgage financing issues, including lack of supply of mortgage loans, tightened lending requirements and increases inelevated interest rates, may reduce demand for our products. Purchasers of our real estate products may obtain mortgage loans to finance a substantial portion of the purchase price or may need to obtain mortgage loans to finance the construction costs of homes to be built on homesites purchased from us. Homebuilder customers depend on retail purchasers who rely on mortgage financing. Elevated interest rates have increased the cost of owning a home in recent years and any future increases would further affect purchasing power, which may lower demand for residential real estate. In addition to residential real estate, increased interest rates and restrictions in the availability of credit may also negatively impact sales or development of our commercial properties or other land we offer for sale. While overin the past couplerecent years, elevated interest rates have negatively impacted buyers’ ability to obtain financing and the housing market generally, to date we have not experienced material declines in customer demand for our homesites. However, in the event financing challenges reduce demand from homebuilders to purchase homesites, then our sales, results of operations, cash flows and financial condition may be negatively affected.

Our hospitality segment is subject to various risks inherent to the hospitality industry. TheAlthough hospitality revenue has continued to grow in recent years, the following factors, among others, are common to the hospitality industry, and may reduce the revenues generated by our hotel properties, food and beverage operations, golf courses, beach clubs, marinas and other entertainment assetsofferings or the rate at which they are generated:

Our insurance coverage on our properties may be inadequate or our insurance costs may increase.increase and uninsured losses or losses in excess of our insurance coverage could adversely affect our business. We maintain insurance on our properties, including property, liability, fire, flood and extended coverage.coverage, However,but wecapacity constraints in the Florida insurance market may limit availability of desired coverages or materially increase costs. We do not insure our timber assets. Additionally, our insurance for hurricanes has limitations per named storm and is subject to deductibles. We use our discretion when determining amounts, coverage limits and deductibles for insurance. These terms are determined based on retaining an acceptable level of risk at a reasonable cost.risk. This may result in insurance coverage that, in the event of a substantial loss, would not be sufficient to pay the full current market value or current replacement cost of our lost investment. Inflation, changes in building codes and ordinances, environmental considerations and other factors also may make it unfeasible to use insurance proceeds to replace a facility after it has been damaged or destroyed. Under such circumstances, we may not receive insurance proceeds or the insurance proceeds we receive may not fully cover business interruptions or losses and our earnings, liquidity, or capital resources may be adversely affected.

Our insurance policies are generally renewed on an annual basis and, depending on factors such as market conditions, the premiums, terms, policy limits and/or deductibles can vary substantially. We can give no assurance that we will be able to maintain adequate insurance in the future at rates or on other terms we consider commercially reasonable. To offset negative insurance market trends, we may decide to self-insure additional risks. In the even that we decide to self-insure, if we experience a greater number of self-insured losses than we anticipate, our financial performance could be adversely affected. If we lose our ability to, or decide not to, self-insure these risks, our insurance cost could materially increase and we may find it difficult to obtain adequate levels of insurance coverage.

Alternatively, increases in consumer spending through e-commerce channels may significantly affect our tenants’ ability to generate sales in their stores,sales, which could affect their ability to make payments to us. These economic and market conditions, combined with rising or sustained high levels of inflation and lack of labor availability, may also place a number of our key customers under financial stress, which may adversely affect our occupancy rates and our profitability, which, in turn, may have a material adverse effect on our business, results of operations, cash flows and financial condition.

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

Our largest shareholder controls approximately 35.3%33.8% of our common stock, which may limit our minority shareholders’ ability to influence corporate matters. As of December 31, 2024,2025, based on public filings, clients of Fairholme Capital Management, L.L.C. (“FCM”), an investment advisor registered with the SEC, beneficially owned approximately 35.3%33.8% of our common stock. FCM and its client, The Fairholme Fund, a series of investments originating from Fairholme Funds, Inc., may be deemed affiliates of ours. Fairholme Holdings, LLC (“Fairholme”), which wholly owns FCM, is in a position to influence the vote of most matters submitted to our shareholders, including any merger, consolidation or sale of all or substantially all of our assets, the nomination of individuals to our Board and any potential change in our control. These factors may discourage, delay or prevent a takeover attempt that shareholders might consider in their best interests or that might result in shareholders receiving a premium for their common stock. Additionally, our articles of incorporation and certain provisions of Florida law contain anti-takeover provisions that may make it more difficult to effect a change in our control.

Risks associated with our human capital. Our ability to successfully implement our business strategy depends on our ability to attract and retain skilled employees. The labor markets in the industries in which we operate are competitive. We must attract, train and retain a large number of qualified employees while controlling related labor costs. Tighter labor markets may make it even more difficult for us to hire and retain qualified employees and control labor costs. Our ability to attract qualified employees and control labor costs is subject to numerous external factors, including prevailing wage rates, employee preferences, employment law and regulation, labor relations and immigration policy. Changes in immigration laws and policies could also affect labor market conditions, potentially increasing competition for workers and related labor costs. While we are committed to recruiting top talent by offering, among other things, competitive wages, a significant increase in competition or labor costs increasing from any of the aforementioned factors may have a material adverse impact on our business, results of operations, cash flows and financial condition.

Furthermore, our hospitality operations are highly dependent on a large seasonal workforce. We have historically relied on the J-1 and H-2B visa programs to bring workers to the U.S. to fill seasonal staffing needs and ensure that we have the appropriate workforce in place. Our ability to recruit and retain seasonal hospitality staff may be adversely affected by changes in immigration policy and administration of non-immigrant visa programs. If we are unable to obtain sufficient numbers of seasonal workers, through the J-1 and H-2B programs or otherwise, we may not be able to recruit and hire adequate personnel, and material increases in the cost of securing our workforce may be possible in the future. Increased seasonal wages orwages, an inadequate workforce or increased related labor costs may have a material adverse effect on our business, results of operations, cash flows and financial condition.

Risks associated with cybersecurity. We are reliant on computers and digital technology, including certain technology systems from third-party vendorsvendors, which we use to operate our businessbusiness, which are not under our control. We collect digital information on all aspects of operations. Hospitality related businesses, in particular, require the collection and retention of identifiable information of our customers, as such information is entered into, processed, summarized, and reported by the various information systems we use. All of these activities give rise to material cyber risks and potential costs and consequences that cannot be estimated or predictedpredicted, and which may not be fully insured by our cyber risk insurance policy. For example, the SEC recently adopted rules requiringrequires the disclosure of cybersecurity incidents that we determine to be “material,” to be made within four business days of such determination, which can be complex, requiring a number of assumptions based on several factors. It is possible that the SEC may not agree with our determinations, which could result in fines, civil litigation or damage to our reputation.

The integrity and protection of our customer, employee and other company data, is critical to us. We make efforts to maintain the security and integrity of these networks and related systems. We have implemented various measures to manage the risk of a security breach or disruption.disruption that are based in part on the Payment Card Industry Data Security Standard, the National Institute of Standard and Technology, and the System and Organization Controls, all of which are integrated into our overall enterprise risk management program. There can be no assurance that our security efforts and measuresmeasures, or those of our third-party vendors, with which we interact, will be effective or that attempted security breaches or disruptions, whether through cyber-attackscyber attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, persons inside our organization or persons with access to systems, energy blackouts, natural disasters, terrorism, war, and other significant disruptions of our networks and related systems, or disruptions would not be successful or damaging. Further, the risk of a security breach or disruption, particularly through cyber-attackscyber attacks or cyber-intrusion,cyber intrusion, including by computer hackers, foreign governments or state-sponsored actors, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. In particular, there has been a spike in cybersecurity attacks as businesses have increased reliance on virtual environments and communications systems, which have been subject to increasing third-party vulnerabilities and security risks. Additionally, to the extentemergence of artificial intelligence capabilitieshas improveprovided additional tools for those who perpetrate these attacks, including through social engineering, the development of customized malware, and arean increasinglyenhanced adopted, they may be usedability to identifyevade vulnerabilities and craft increasingly sophisticated cybersecurity attacks.detection. Attachments crafted with artificial intelligence tools could directly attack information systems with greater speed and/or efficiency than a human threat actor or create more effective phishing emails. Vulnerabilities may also be introduced from the use of artificial intelligence by us, our customers, suppliers and other business partners and third-party providers. Use of artificial intelligence by our employees, whether authorized or unauthorized, increases the risk that our intellectual property and other proprietary information will be unintentionally disclosed.

In addition, companies across many industries arehave facingfaced scrutiny from lawmakers, regulators, investors, customers, employees and other stakeholders related to their environmental, social, and governance (“ESG”)sustainability practices, including those related to the environment, climate, diversity and inclusion, human rights and governance transparency. Various jurisdictions are developing climate-related laws or regulations that could cause us to incur additional direct costs for compliance, as well as indirect costs resulting from our customers, suppliers, or additional compliance costs that are passed on to us. For example, the SEC has issued final rules that would require expanded disclosures related to climate change. Although these rules are currently stayed pending judicial review, if implemented as proposed, these rules would significantly increase our climate-related disclosure obligations. Additionally, investor advocacy groups, including ESG-focusedsustainability-focused investor advocacy groups, certain institutional investors, investment funds and other influential investors arehave also been focused on ESGsustainability practices. Legal and regulatory requirements, as well as stakeholder expectations, on ESGsustainability practices and disclosures are subject to change, can be unpredictable, and may be difficult and expensive for us to comply with. Further, there is an increasing number of anti-ESG initiatives in the U.S. that may conflict with other regulatory requirements or various stakeholders’ expectations. We may from time to time also change our approach to sustainability matters due to a broader change in strategy, reduced relevance of such initiatives or changing market conditions. If we fail, or are perceived to be failing, to meet evolving legal and regulatory requirements or the expectations of our stakeholders, we may be subject to enforcement actions, required to pay fines, investors may sell their stock, we may suffer from reputational damage and our business or financial condition could be adversely affected.

We utilize derivative financial instruments to reduce our exposure to market risks from changes in interest rates.rates on certain loans and refinance outstanding debt prior to or in connection with its maturity. We may enter into interest rate swap instruments to limit our exposure to changes in variable interest rates. While our hedging strategy is designed to minimize the impact of increases in interest rates applicable to some of our variable rate debt, there can be no guarantee that our hedging strategy will be effective, and we may experience credit-related losses in some circumstances. See Note 6.5. Financial Instruments and Fair Value Measurements and Note 10.9. Debt, Net included in Item 15 of this Form 10-K for additional information. In addition, we typically refinance our outstanding debt prior to or in connection with its maturity. If we are unable to refinance our debt on favorable terms, our interest expense may increase. A refinancing of our debt could also require us to comply with more onerous covenants and further restrict our business operations. Any of these circumstances could adversely impact our financial position and results of operations.

We cannot assure you that we will not make changes to our existing capital allocation plan, including whether we will continue to pay dividends at the current rate or at all. In 2024,2025, we paid cash dividends of $0.12 per share on our common stock in the first and second quarters and $0.14 per share on our common stock in each of the thirdfirst three quarters, and $0.16 per share in the fourth quarters,quarter, and we currently expect to continue to pay quarterly dividends. We also repurchased approximately 1.4% of our outstanding shares during 2025, for an aggregate repurchase price of $40.0 million. As of December 31, 2025, we had the authority to repurchase additional shares up to our remaining authorization limit of $60.0 million. The declaration and payment of any future dividends and future decisions with respect to share purchases will be at the discretion of our Board after taking into account various factors, including without limitation, our financial condition, earnings, capital requirements of our business, and potential growth opportunities, the terms of any credit agreements or indentures to which we may be party at the time, legal requirements, industry practice, market conditions and other factors that our Board deems relevant. Our decisions regarding the allocation of capital among dividends, stock repurchases, development projects, and other uses may not satisfy market expectations or produce the long-term returns we anticipate. Changes in our capital allocation strategy, could adversely affect our stock price and our relationships with investors. Accordingly, there can be no assurance that our dividends or stock repurchases will continue at the same levels, or at all.

St. Joe is a diversified real estate development, asset management and operating company with all of its real estate assets and operations in Northwest Florida. We intend to use existing assets for residential, hospitality and commercial ventures. We have significant residential and commercial land-use entitlements. We actively seek higher and better uses for our real estate assets through a range of development activities. As part of our core business strategy, we have created a meaningful portion of our business through JVs. We enter into these arrangements for the purposes of developing real estate and other business activities, which we believe allows us to complement our growth strategy, leverage industry expertise and diversify our business. We may also partner with or explore the sale of discrete assetsassets, whensuch weas our sale of a senior living community property in September 2025, in order to optimize resource allocation and/or othersmaximize canvalue. betterSee deployNote resources.4. Joint Ventures included in Item 15 of this Form 10-K for additional information. We seek to continue to enhance the value of our owned real estate assets by developing residential, commercialhospitality and hospitalitycommercial projects to meet market demand. Approximately 87% of our real estate is located in Florida’s Bay, Gulf, and Walton counties. Approximately 90% of our real estate land holdings are located within fifteen miles of the Gulf of Mexico.Gulf.

We believe our present capital structure, liquidity and land provide us with years of opportunities to increase recurring revenue and long-term value for our shareholders. We intend to continue to focus on our core business activity of real estate development, asset management and operations by developing long-term, scalable residential communities, growing our hospitality offerings and expanding our portfolio of income producing commercial properties, developing long-term, scalable residential communities and growing our hospitality offerings.properties. We continue to develop a broad range of asset types that we believe will provide acceptable rates of return, grow recurring revenues and support future business. Capital commitments will be funded with cash proceeds from completed projects, existing cash, owned-land, partner capital and financing arrangements. WeThese doinvestments notare anticipatemade immediatewith benefitsa fromlong-term investments.value creation perspective. Timing of projects may be subject to delays caused by factors beyond our control. We may also choose to operate rather than lease assets, lease rather than sell assets, or sell improved rather than unimproved land that may delay revenue and profits.

Throughout 2024, we continued to generate positive financial results. While macroeconomic factors such as uncertainty over tariffs, inflation, elevated interest rates,rates and higher insurance costs,costs supplyfor chain disruptions, labor shortages, financial institution disruptionsconsumers and geopoliticaloverall conflicts,consumer confidence, among other things, continued to produce economic headwinds and impacted buyer sentiment,sentiment demandin acrossmany parts of the country, our segments remainscontinued strong.to generate positive financial results throughout 2025. We believe this is primarily due to the continued growth of Northwest Florida as a result of increasednet migration, which we attribute to the region’s high quality of life, natural beauty and outstanding amenities.

DespiteWhile theelevated stronginterest demandrates, acrossmarket ourconditions segments,in wetheir alsohome continuestates to feel the impact from the aforementioned macroeconomic factors. In addition, inflation,and higher insurance costs and elevated interest rates, have increased operating costs and loan rates, as compared to recent years. While elevated interest rates have negatively impacted buyers’or delayed the ability of some buyers to obtain financing andor thesell housingtheir marketexisting generally,home in their home state, the impact has been partially offset by the net migration into our markets, limited housing supply relative to demandmarkets and the number of cash buyers. Market conditions have also not caused an increase in cancellation rates as homebuilders have continued to perform on their contractual obligations with us.

The residential segment generates revenue from sales of homesiteshomesites, homes and other residential land and certain homesite residuals from homebuilder sales that provide us a percentage of the sale price of the completed home if the home price exceeds a negotiated threshold. Revenue is recognized at the point in time when a sale is closed and title and control has been transferred to the buyer. The residential segment also generates revenue from the sale of tap and impact fee credits, marketing fees and other fees on certain transactions. Certain homesite residuals and other revenue related to homebuilder homesite sales are recognized in revenue at the point in time of the closing of the sale. The residential segment incurs cost from direct costs (e.g., development and construction costs), selling costs and other indirect costs. Cost of real estate revenue excludes depreciation, depletion and amortization expense.

Our residential segment includes the WatersoundBayside Origins,at Watersound Origins West, Watersound CampWard Creek, Breakfast Point East, Titus Park, Bayside at Ward Creek, Breakwater at Ward Creek, Salt Grass at Ward Creek, College Station, Park Place, Salt Creek at Mexico Beach, Salt Grass at Ward Creek, Titus Park, Watersound Camp Creek, Watersound Origins, Watersound Origins West and WindMark Beach communities, which are large scale, multi-phase communities with current development activity, sales activity or future phases. Homesites in these communities are developed based on market demand and sold primarily to homebuilders and on a limited basis to retail customers.

The East Lake Creek, East Lake Powell, Lake Powell, Pigeon Creek, Teachee, West Bay Creek and West Laird communities have phases of homesites in preliminary planning or permitting. Homesites in these communities will be developed based on market demand.

The Latitude Margaritaville Watersound community is a planned 55+ active adult residential community in Bay County, Florida. The community is located near the Intracoastal Waterway with convenient access to the Northwest Florida Beaches International Airport. The community is being developed through our unconsolidated Latitude Margaritaville Watersound JV with our partner Minto Communities USA, a homebuilder and community developer, and is estimated to include approximately 3,5003,700 residential homes, which willare bebeing developed in smaller increments of discrete neighborhoods. As of December 31, 2024,2025, the unconsolidated Latitude Margaritaville Watersound JV has completed 1,6632,190 home sale transactions of the total estimated 3,5003,700 homes planned in the community and had 367149 homes under contract, which are expected to result in a sales value to the JV of approximately $226.9$88.8 million at closing of the homes. See Note 4. Joint Ventures included in Item 15 of this Form 10-K for additional information.

As of December 31, 2024,2025, we had twentyeighteen different homebuilders within our residential communities. As of December 31, 2024,2025, we had 1,0741,992 residential homesites under contract, which are expected to result in revenue of approximately $102.0$143.5 million, plus residuals, at closing of the homesites over the next several years. By comparison, as of December 31, 2023,2024, we had 1,4861,074 residential homesites under contract, which were expected to result in revenue of approximately $132.5$102.0 million, plus residuals. The change in homesites under contract is due to homesite transactions during 20242025, new contracts, including a long-term contract totaling approximately 650 undeveloped homesites within the SouthWood community, and the amount of remaining homesites in current phases of the residential communities. Homesite prices vary significantly by community and often sell in concentrated transactions that may impact period over period results. As of December 31, 2024,2025, in addition to the 1,0741,992 homesites under contract in other residential communities, our unconsolidated Latitude Margaritaville Watersound JV had 367149 homes under contract, which together with the 1,0741,992 homesites are expected to result in a sales value of approximately $328.9$232.3 million at closing of the homesites and homes.

Our hospitality segment features a private membership club (the “Watersound Club”), hotel operations, food and beverage operations, golf courses, beach clubs, retail outlets, gulf-front vacation rentals, management services, marinas and other entertainment assets.offerings. The hospitality segment generates revenue from membership sales, golf courses, lodging at our hotels, short-term vacation rentals, management of The Pearl Hotel (prior to acquisition in December 2022), food and beverage operations, merchandise sales, marina operations (including boat slip rentals, boat storage fees and fuel sales), flight services, other resort and entertainment activities and beach clubs, which includes food and beverage operations of the WaterColor Beach Club. Hospitality revenue is generally recognized at the point in time services are provided and represent a single performance obligation with a fixed transaction price. Hospitality revenue recognized over time includes non-refundable club membership initiation fees, club membership dues, management feesdues and other membership fees. The hospitality segment incurs costs from the services and goods provided, personnel costs, maintenance of the facilities and holding costs of the assets. From time to time, we may explore the sale of certain hospitality properties, the development of new hospitality properties, as well as new entertainment and management opportunities. Our hospitality segment may also generate revenue from the sale of operating properties. Real estate sales in our hospitality segment incur costs of revenue directly associated with the land, development, construction and selling costs. Cost of hospitality revenue and cost of real estate revenue exclude depreciation, depletion and amortization expense. Some of our JV assets and other assets incur interest and financing expenses related to the loans as described in Note 10.9. Debt, Net included in Item 15 of this Form 10-K.

Watersound Club provides club members access to our member facilities, which include the Watersound Beach Club, Camp Creek golf course and amenities, Shark’s Tooth golf course and tennis center and The Third golf course, which opened in November 2024. In addition, in June 2024, we opened The Sporting Preserve, a 12-stand sporting clays course. Watersound Club offers different types of club memberships, each with different access rights and associated fee structures. Watersound Club is focused on creating an outstanding membership experience combined with the luxurious aspects of a destination resort. Watersound Beach Club located on Scenic Highway 30A with over one mile of Gulf of Mexico frontage, has two resort-style pools, two restaurants, three bars, kid’s room and a recreation area. Camp Creek includes an 18-hole golf course, a full club house, health and wellness center, three restaurants, a tennis and pickle ball center, a resort-style pool complex with separate adult pool, a golf teaching academy, pro shop and multi-sport fields. Shark’s Tooth includes an 18-hole golf course, tennis center, a full club house, a pro shop, as well as two food and beverage outlets. The Third includes an 18-hole golf course. Guests of some of our hotels also have access to certain Watersound Club amenities.

Watersound Origins amenities include a resort-style pool, fitness center, pickle ball courts and tennis courts located in the community. Access to these amenities is reserved to Watersound Origins andOrigins, Watersound Origins West and Watersound Villas on the Fairway members consisting of the communities’ residents. In addition, an executive golf course located in the community is available to residents and for public play.

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

Our commercial segment includes leasing of commercial property, multi-family, senior living, self-storage and other assets.assets, as well as senior living prior to the sale of the SJWCSL, LLC’s (“Watercrest JV”) senior living community property in September 2025. See Note 4. Joint Ventures included in Item 15 of this Form 10-K for additional information. The commercial segment also oversees the planning, development, entitlement, management and sale of our commercial and forestry land holdings for a variety of uses, including a broad range of retail, office, hotel, senior living, multi-family, self-storage and industrial properties. We believe the diversity of our commercial segment complements the growth of our residential and hospitality segments. We provide development opportunities for national, regional and local retailers and other strategic partners in Northwest Florida. We own and manage retail shopping centers and develop commercial parcels. We are currently developing the Watersound Town Center in Walton County, Florida and Watersound West Bay Center in Bay County, Florida. These lifestyle centers are complementary to the Watersound Origins, Watersound Origins West and Latitude Margaritaville Watersound residential communities. In conjunction with FSU and TMH, we are in the process of developing an 87-acre medical campus in Panama City Beach, Florida, the first building of which opened in July 2024. We have large land holdings near the Pier Park retail center, adjacent to the Northwest Florida Beaches International Airport, near or within business districts in the region and along major roadways. We lease land for various other uses. The commercial segment manages our timber holdings in Northwest FloridaFlorida, which includes growing and selling pulpwood, sawtimber and other products.

The commercial segment generates leasing revenue and incurs leasing expenses primarily from maintenance and management of our properties, personnel costs and asset holding costs. Our commercial segment generates revenue from the sale of developed and undeveloped land, timber holdings or land with limited development and/or entitlements and the sale of commercial operating properties. Real estate sales in our commercial segment incur costs of revenue directly associated with the land, development, construction, timber and selling costs. Our commercial segment generates timber revenue primarily from open market sales of timber on site without the associated delivery costs. Cost of leasing revenue and cost of real estate revenue exclude depreciation, depletion and amortization expense. Some of our JV assets and other assets incur interest and financing expenses related to loans as described in Note 10.9. Debt, Net included in Item 15 of this Form 10-K.

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

OurWe commercial development is currently concentrated in thehave commercial projects under development and construction as detailed in the table below. In addition to these properties, we have other commercial buildings and sites in various stages of planning and development.

Residential Real Estate Revenue and Gross Profit. During 2024,2025, residential real estate revenue decreasedincreased $38.9$48.2 million, or 25.0%,41.3%, to $116.8$165.0 million, as compared to $155.7$116.8 million in 2023.2024. During 2024,2025, residential real estate gross profit decreasedincreased $23.0$26.7 million, to $54.8$81.5 million (or gross margin of 46.9%49.4%), as compared to $77.8$54.8 million, (or gross margin of 50.0%46.9%) in 2023.2024. During 2024,2025, we sold 912911 homesites, 25 homes and had an unimproved residential land sale of $0.9 million, compared to 1,063912 homesites and no homes or unimproved residential land sales of $0.6 million during 2023.2024. During 20242025 and 20232024 the average base revenue, excluding homesite residuals, per homesite sold was approximately $108,000$137,000 and $107,000,$108,000, respectively.respectively, Thedue currentto periodthe homesitemix of sales from different communities. Homesite sales during 2024 also include the sale of 82 entitled but undeveloped homesites sold within the SouthWood community, compared to 100none in the priorcurrent period. The revenue, gross profit and margin for each period was impacted by the volume of sales within each of the communities, the difference in pricing among the communities andcommunities, the difference in the cost of the homesitedevelopment development.and the volume of sales within each of the communities. The number of homesites sold varied in each period due to the timing of homebuilder contractual closing obligations in our residential communities.

Timber Revenue and Gross Profit. Timber revenue decreased $0.7 million, or 14.3%, towas $4.2 million during 2024,each asof compared to $4.9 million in 2023. The decrease was primarily due to a decrease in prices2025 and 2024. There were 246,000 tons of wood products sold inat thean currentaverage period.price Thereper wereton of $16.02 during 2025, as compared to 256,000 tons of wood products sold at an average price per ton of $14.56$14.56, during 2024, as compared to 259,000 tons of wood products sold at an average price per ton of $16.56, during 2023.2024. Timber gross margin was 81.0% during 2024,both compared to 83.7% during 2023. The decrease was primarily due to the lower prices2025 and less tons of wood products sold in the current period.2024.

Other Revenue. Other revenue primarily consists of our real estate brokerage, title insurance agency and insurance agency business revenue and mitigation bank credit sales. Other revenue increased $3.7 million during 2025, compared to 2024, primarily due to our real estate brokerage business, which began operations in the second quarter of 2025.

Hospitality revenue increased $46.8$16.2 million, or 30.7%8.1% to $215.4 million during 2025, as compared to $199.2 million during 2024, as compared to $152.4 million in 2023.2024. The increase in hospitality revenue was primarily related to the growthincrease in membership dues and membership ancillary spend, newas Campwell Creekas amenitiesThe Third golf course, which opened in AprilNovember 2023,2024 asand wellthe asrenovated Shark’s Tooth clubhouse, which reopened in February 2025. The increase in revenue was also related to an increase in lodginghotel revenue. The increase in lodging revenue was related to Embassy Suites by Hilton Panama City Beach Resort, which opened in April 2023; The Lodge 30A, which opened in February 2023; and Home2 Suites by Hilton Santa Rosa Beach, Hotel Indigo Panama City Marina and Camp Creek Inn, which all opened in June 2023.operations. As of December 31, 2024,2025, Watersound Club had 3,4763,594 members, compared with 3,3173,476 members as of December 31, 2023,2024, a net increase of 159118 members. As of both December 31, 20242025 and 2023,2024, we had 1,053 operational hotel rooms (excluding 245 and 124 hotel rooms related to unconsolidated JVs, respectivelyJVs). Hospitality had a gross margin ofwas 31.1% during 2025, compared to 31.5% during 2024, compared to 19.8% during 2023.2024. The increasedecrease in gross margin was primarily due to newongoing assetsoperating beingcosts operationalfor throughoutThe Third golf course and reopening and ongoing operating costs of the Shark’s Tooth clubhouse during the current period.

Leasing revenue increased $9.5$3.3 million, or 18.7%,5.5%, to $63.6 million during 2025, as compared to $60.3 million during 2024, as compared to $50.8 million in 2023.2024. The increase was primarily due to new multi-family,additional commercial propertyproperty, multi-family and marina leases, aspartially welloffset asby othera newdecrease leases.related to the Watercrest JV’s senior living community property, which was sold and ceased operating activities, and the sale of 24 townhomes in the Watersound Villas on the Fairway community in the current period. Leasing gross margin increased to 52.2%55.3% during 2024,2025, as compared to 49.2%52.2% during 2023,2024. The increase in leasing gross margin was primarily due to newadditional leases, as well as lower operating costsleases in the current period.period and the sale of the Watercrest JV’s senior living community property in September 2025, which operated with lower margins.

Corporate and other operating expenses increased $1.4$2.1 million, or 8.3%, to $27.3 million during 2025, as compared to $25.2 million during 2024, as compared to $23.8 million in 2023.2024. The increase was due to increased operating costs, primarily duerelated to employee costscosts, relatedproperty totaxes, bonuseslicenses, professional fees, marketing and restrictedowner stockassociation awards, partially offset by a decrease in property taxes due to timing of residential homesite completions. See Note 15. Stockholders’ Equity and Note 16. Stock Based Compensation included in Item 15 of this Form 10-K for additional information related to the issuance of common stock for employee compensation.costs.

Depreciation, depletion and amortization expense increased $7.7$1.1 million during 2024,2025, as compared to 2023,2024, primarily due to new hospitality and commercial assets placed in service.service, partially offset by assets sold in the current period. Depreciation is a non-cash, generally accepted accounting principles (“GAAP”) expenseexpense, which is amortized over an asset’s useful life, while maintenance and repair expenses are period costs and expensed as incurred. See Note 2. Significant Accounting Policies included in Item 15 of this Form 10-K for additional information.

Investment income, net primarily includes (i) interest andinterest, dividends earned and accretion ofincome theaccrued netor discountreceived on our cash, cash equivalents and other investments, (ii) interest income earned on the time deposit held by a special purpose entity and (iii) interest earned on notes receivablereceivable, the Company’s unimproved land contribution to the unconsolidated Latitude Margaritaville Watersound JV as home sales are transacted in the community and other receivables as detailed in the table below:

Interest expense increaseddecreased $3.0$3.1 million, or 9.8%,9.2%, to $30.5 million in 2025, as compared to $33.6 million in 2024,2024. asThe compared to $30.6 milliondecrease in 2023, primarily due to completion of projects where interest expense is nodue longerto capitalizedrepayment and the increase inof project financing throughoutand 2023.a decrease in interest rates from the prior period. See Note 10.9. Debt, Net and Note 18.17. Other Income, Net included in Item 15 of this Form 10-K for additional information regarding project financing.

Equity in income (loss) from unconsolidated joint ventures includes our proportionate share of earnings or losses of unconsolidated JVs accounted for byusing the equity method as detailed in the table below. See Note 4. Joint Ventures included in Item 15 of this Form 10-K for additional information.

Other Income (Expense) Income,, Net

Other income (expense) income,, net primarily includes accretion income from our retained interest investments, gain on insurancecontributions recoveriesto unconsolidated joint ventures, gain (loss) on disposition of assets and other income and expense items as detailed in the table below:

Other (expense) income, net decreased $3.9 million to other expense, net of $0.7 million during 2024, as compared to other income, net of $3.2 million in 2023. Accretion income from retained interest investments includes accretion of investment income over the life of the retained interest using the effective yield method, prior to optional prepayment, in full, of the installment notes in August 2023.

Income tax expense was $26.0$39.2 million in each2025, ofas 2024compared andto 2023.$26.0 million during 2024. Our effective tax rate was 26.4%25.3% in 2024,2025, as compared to 25.1%26.4% in 2023.2024.

Our effective rate for 20242025 and 2023,2024, differed from the federal statutory rate of 21.0% primarily due to state income taxestaxes, nontaxable or nondeductible and other permanent differences. See Note 13.12. Income Taxes included in Item 15 of this Form 10-K for additional information.

Homesites. Revenue from homesite sales decreasedincreased $37.8$32.7 million, or 26.1%,30.5%, during 2024,2025, as compared to 2023,2024, primarily due to the mix and number of homesites sold per community and the timing of homebuilder contractual closing obligations in our residential communities. During 20242025 and 2023,2024, the average base revenue, excluding homesite residuals, per homesite sold was approximately $108,000$137,000 and $107,000,$108,000, respectively.respectively, Thedue currentto periodthe homesitemix of sales from different communities. Homesite sales during 2024 also include the sale of 82 entitled but undeveloped homesites sold within the SouthWood community, compared to 100none in the priorcurrent period. Revenue includes estimated homesite residuals of $3.6$10.9 million and $24.0$3.6 million, during 20242025 and 2023,2024, respectively. The decreaseincrease in estimated homesite residuals was due to the mix and number of homesites sold in specific communities during the current period. GrossHomesite gross margin decreasedincreased to 50.5% during 2025, as compared to 47.0% during 2024, as compared to 49.3% during 2023, primarily due to the cost, mix and number of homesites sold from different communities during each period. Gross margin may vary each period depending on the location of homesite sales.

Other revenue includes tap and impact fee credits sold, marketing fees and other fees. Other revenue includes estimated fees related to homebuilder homesite sales of $2.5$2.8 million and $5.0$2.5 million during 20242025 and 2023,2024, respectively. The decrease in estimated fees related to homebuilder homesite sales was due to the mix and number of homesites sold in specific communities during each period.

Investment income, net primarily consists of interest earned on our notes receivable and unimproved land contribution to our unconsolidated Latitude Margaritaville Watersound JV as home sales are transacted in the community. Investment income, net decreased $0.2 million during 2025, as compared to 2024, due to fewer home sales transacted in the community during the current period. See Note 4. Joint Ventures included in Item 15 of this Form 10-K for additional information. Interest expense primarily consists of interest incurred on our portion of the total outstanding CDD debt. See Note 10.9. Debt, Net included in Item 15 of this Form 10-K for additional information.

Equity in income from unconsolidated joint ventures includes our proportionate share of earnings or losses of an unconsolidated JV accounted for by the equity method. Equity in income from unconsolidated joint ventures increased $5.7$2.9 million during 2024,2025, compared to 2023.2024. The increase was primarily due to a higher average sales price and margin per home soldsold, andpartially offset by the increaseddecreased volume of home sale transactionstransactions. duringThe year ended December 31, 2025, also includes $0.5 million of intra-entity profit elimination related to the currentsale periodof relatedadditional land to our unconsolidated Latitude Margaritaville Watersound JV, a pro-rata portion of which will be recognized as each home on the land is sold by the JV. The Latitude Margaritaville Watersound JV completed 527 home sale transactions during 2025, compared to 659 home sale transactions during 2024, compared to 641 home sale transactions during 2023.2024. See Note 4. Joint Ventures included in Item 15 of this Form 10-K for additional information.

Revenue from our clubs increased $26.8$10.7 million, or 49.6%,13.2%, during 2024,2025, as compared to 2023.2024. The increase in revenue in the current period was due to growthan increase in membership dues anddues, membership ancillary spend, lodging related to the Camp Creek Inn, as well as theThe newThird Campgolf Creek amenitiescourse, which opened in AprilNovember 20232024 and Campthe Creekrenovated InnShark’s Tooth clubhouse, which openedreopened in JuneFebruary 2023.2025. As of December 31, 2024,2025, Watersound Club had 3,4763,594 members, compared with 3,3173,476 members as of December 31, 2023,2024, a net increase of 159118 members. Our clubs gross margin was 44.6%42.2% during 2024,2025, compared to 28.7%44.6% during 2023.2024. The increasedecrease in gross margin was primarily due to newongoing assetsoperating beingcosts operationalfor throughoutThe Third golf course and reopening and ongoing operating costs of the Shark’s Tooth clubhouse during the current period.

Revenue from otherour hospitalityhotel operations increased $0.7$4.6 million, or 5.8%,4.4%, during 2024,2025, as compared to 2023.2024. The increase was primarily duerelated to increasedlodging occupancyrevenue, andas specialwell eventsas atguest ourancillary Point South Marina Bay Point and Point South Marina Port St. Joe.spend. Our other hospitality operationshotels had a gross margin of 15.7%24.2% during 2024,2025, comparedcomparable to 19.2%23.5% during 2023. The decrease in gross margin was due to increased operational costs during the current period.2024.

Leasing revenue includes marina boat slip and dry storage rentals, as well as leases of other hospitality assets. Leasing revenue increased $1.4$0.4 million, or 66.7%,11.4%, during 2024,2025, as compared to 2023,2024, primarily due to increased occupancy and rates at our marinas and other hospitality assets.

St. Joe is a diversified Florida real estate development, asset management and operating company with all of its real estate assets and operations in Northwest Florida. We intend to use existing assets for residential, hospitality and commercial ventures. We have significant residential and commercial land-use entitlements. We actively seek higher and better uses for our real estate assets through a range of development activities. As part of our core business strategy, we have created a meaningful portion of our business through JVs. We enter into these arrangements for the purposes of developing real estate and other business activities, which we believe allows us to complement our growth strategy, leverage industry expertise and diversify our business. We may partner with or explore the sale of discrete assets, such as our sale of a senior living community property in September 2025, in order to optimize resource allocation and maximize value. See Note 4. Joint Ventures for additional information. We seek to continue to enhance the value of our owned real estate assets by developing residential, hospitality and commercial projects to meet market demand. Approximately 87% of our real estate is located in Florida’s Bay, Gulf, and Walton counties. Approximately 90% of our real estate land holdings are located within fifteen miles of the Gulf.

We believe our present capital structure, liquidity and land provide us with years of opportunities to increase recurring revenue and long-term value for our shareholders. We intend to continue to focus on our core business activity of real estate development, asset management and operations by developing long-term, scalable residential communities, growing our hospitality offerings and expanding our portfolio of income producing commercial properties. In addition, we operate a real estate brokerage,brokerage business, title insurance agency and insurance agency business. We continue to develop a broad range of asset types that we believe will provide acceptable rates of return, grow recurring revenues and support future business. Capital commitments will be funded with cash proceeds from completed projects, existing cash, owned-land, partner capital and financing arrangements. These investments are made with a long-term value creation perspective. Timing of projects may be subject to delays caused by factors beyond our control. We may also choose to operate rather than lease assets, lease rather than sell assets, or sell improved rather than unimproved land that may delay revenue and profits.

Highlights for the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025 include:

While macroeconomic factors such as uncertainty over tariffs, continued inflation, geopolitical conflicts, elevated interest rates and higher insurance costs for consumers and overall consumer confidence, among other things, continued to produce economic headwinds and impacted buyer sentiment in many parts of the country, our segments continued to generate positive financial results through the first quartersix months of 2026. We believe this is primarily due to the continued growth of Northwest Florida as a result of net migration, which we attribute to the region’s high quality of life, natural beauty and outstanding amenities.

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

The East Lake Creek, East Lake Powell, Lake Powell, Lake Powell Estates, Park Place East, Pigeon Creek, Teachee, West Bay Creek and West Laird projects have phases of homesites in preliminary planning or permitting. Homesites in these projects will be developed based on market demand.

The Latitude Margaritaville Watersound community is a 55+ active adult residential community in Bay County, Florida. The community is located near the Intracoastal Waterway with convenient access to the Northwest Florida Beaches International Airport. The community is being developed through our unconsolidated Latitude Margaritaville Watersound JV with our partner Minto Communities USA, a homebuilder and community developer, and is estimated to include approximately 3,700 residential homes, which are being developed in smaller increments of discrete neighborhoods. As of MarchJune 31,30, 2026, the unconsolidated Latitude Margaritaville Watersound JV had completed 2,2732,359 home sale transactions of the total estimated 3,700 homes planned in the community and had 158183 homes under contract, which are expected to result in a sales value to the JV of approximately $93.5$115.1 million at closing of the homes. See Note 4. Joint Ventures for additional information.

As of MarchJune 31,30, 2026, we had eighteen different homebuilders within our residential communities. As of MarchJune 31,30, 2026, we had 3,2043,077 residential homesites under contract, which include 1,326 homesites within the Pigeon Creek project, which is structured to include significant variable revenue due to its long-term nature. In addition, as of MarchJune 31,30, 2026, we had approximately 647 entitled but undeveloped homesites within the SouthWood community under contract. Excluding the Pigeon Creek project and SouthWood community contracts due to their scale and timing, the remaining 1,2311,104 residential homesites under contract are expected to result in revenue of approximately $119.9$109.2 million, plus residuals, at closing of the homesites over the next several years. By comparison, as of MarchJune 31,30, 2025, we had 9521,209 residential homesites under contract, with an expected revenue of approximately $94.4$121.7 million, plus residuals. The change in homesites under contract is due to homesite transactions since the end of the prior period, new contracts, and the amount of remaining homesites in current phases of the residential communities. Homesite prices vary significantly by community and often sell in concentrated transactions that may impact period over period results.

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

As of MarchJune 31,30, 2026, our leasing portfolio consists of approximately 1,200,0001,196,000 square feet of leasable space for mixed-use, retail, industrial, office, self-storage and medical uses. Through separate unconsolidated JVs, other commercial properties that are operated by our JV partners include a 124-room TownePlace Suites by Marriott, a 121-room Residence Inn, a Busy Bee branded fuel station and convenience store, which includes a Starbucks, and a golf cart sales and service facility, all located in Bay County, Florida.

Critical accounting policies that we believe reflect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements are set forth in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2025. There have been no significant changes in these policies during the first threesix months of 2026, however we cannot assure you that these policies will not change in the future.

Residential Real Estate Revenue and Gross Profit. During the three months ended MarchJune 31,30, 2026, residential real estate revenue decreasedincreased $4.6$14.7 million, or 14.0%,38.6%, to $28.3$52.8 million, as compared to $32.9$38.1 million during the same period in 2025. During the three months ended MarchJune 31,30, 2026, residential real estate gross profit decreasedincreased $2.4$8.3 million to $12.6$25.3 million (or gross margin of 44.5%47.9%), as compared to $15.0$17.0 million (or gross margin of 45.6%44.6%) during the same period in 2025. During the three months ended MarchJune 31,30, 2026, we sold 168224 homesiteshomesites, 15 homes and 6had homes,an unimproved residential land sale within our SummerCamp Beach community of $2.5 million, compared to 249225 homesiteshomesites, 10 homes and no homesunimproved residential land sales during the same period in 2025. During the three months ended MarchJune 31,30, 2026 and 2025, the average base revenue, excluding homesite residuals, per homesite sold was approximately $121,000 and $114,000,$122,000, respectively, due to the mix of sales from different communities.respectively. The revenue, gross profit and margin for each period was impacted by the difference in pricing among the communities, the difference in the cost of the development and the volume of sales within each of the communities. The number of homesites sold varied each period due to the timing of homebuilder contractual closing obligations in our residential communities.

Commercial, Forestry and Hospitality Real Estate Revenue and Gross Profit. During the three months ended MarchJune 31,30, 2026, we had foursix commercial, forestry and hospitality real estate sales totaling approximately 11524 acres for $6.4$10.4 million, resulting in a gross profit of $4.3$7.0 million (or gross margin of 67.2%67.3%). The commercial, forestry and hospitality real estate sales during the three months ended MarchJune 31,30, 2026, included the sale of a vacation rental property used in hospitality operations for $3.6 million, resulting in a gross margin of approximately 63.9%. During the three months ended MarchJune 31,30, 2025, we had twofive commercialcommercial, forestry and forestryhospitality real estate sales totaling approximately 13311 acres for $3.2$3.3 million, resulting in a gross profit of $3.1$1.6 million (or gross margin of 96.9%48.5%)., which included the sale of a property used in hospitality operations for $1.4 million.

Timber Revenue and Gross Profit. Timber revenue decreased $0.3$0.2 million, or 25.0%,15.4%, to $0.9$1.1 million during the three months ended MarchJune 31,30, 2026, as compared to $1.2$1.3 million in the same period in 2025. There were 52,00070,000 tons of wood products sold at an average price per ton of $15.95$15.30 during the three months ended MarchJune 31,30, 2026, as compared to 74,00062,000 tons of wood products sold at an average price per ton of $14.61,$19.64, during the same period in 2025. Timber gross margin was 77.8%81.8% during the three months ended MarchJune 31,30, 2026, as compared to 83.3%84.6% during the same period in 2025. The decrease in revenue and gross margin was primarily due to product mix and a decrease in tons of wood products sold in the current period.

Other Revenue. Other revenue primarily consists of our Business Services revenue and mitigation bank credit sales. Other revenue increased $3.1$4.2 million during the three months ended MarchJune 31,30, 2026, compared to the same period in 2025. Other gross margin was 12.2%13.2% during the three months ended MarchJune 31,30, 2026, as compared to 40.0%27.3% during the same period in 2025. The change in other revenue and gross margin was primarily due to our real estate brokerage business, which began operations in the second quarter of 2025.

Hospitality revenue increased $5.1$5.4 million, or 12.9%,7.8%, to $44.7$74.2 million during the three months ended MarchJune 31,30, 2026, as compared to $39.6$68.8 million in the same period in 2025. The increase in hospitality revenue was primarily related to membership increases and ancillary spend.spend increases. The increase in revenue was also related to an increase in hotel operations in average daily rate (“ADR”), occupancy and guest incidental spend. As of March 31, 2026, Watersound Club had 3,647 members, compared with 3,498 members as of March 31, 2025, a net increase of 149 members. As of both March 31, 2026 and 2025, we had 1,053 operational hotel rooms (excluding 245 hotel rooms related to unconsolidated JVs). Hospitality gross margin increased to 24.4%41.1% during the three months ended MarchJune 31,30, 2026, compared to 18.2%38.5% during the same period in 2025. The increase in gross margin was primarily due to the continued stabilization of the properties and theimprovements in management of operating expenses.

Leasing revenue decreased $1.6$1.5 million, or 9.8%,9.1%, to $14.7$15.0 million during the three months ended MarchJune 31,30, 2026, as compared to $16.3$16.5 million in the same period in 2025. The decrease was primarily due to the sale of Watercrest JV’s senior living community property in September 2025, which ceased operating activities, and the sale of townhomes in the Watersound Villas on the Fairway community since the end of the prior period. The decrease was partially offset by additional commercial property leases. Leasing gross margin increased to 61.2%60.0% during the three months ended MarchJune 31,30, 2026, as compared to 54.6%53.9% during the same period in 2025. The increase in leasing gross margin was primarily due to additional leases in the current period and the sale of the Watercrest JV’s senior living community property, which operated with lower margins.

Corporate and other operating expenses increased $1.8$0.8 millionmillion, or 12.5%, to $8.4$7.2 million during the three months ended MarchJune 31,30, 2026, as compared to $6.6$6.4 million in the same period in 2025. The increase in corporate and other operating expenses was primarily duerelated to compensationemployee paymentscosts, madeowner inassociation theassessments, firstrepairs quarterand ofmaintenance 2026.and marketing costs.

Depreciation, depletion and amortization expense decreased $0.7$0.6 million during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025,2025. Depreciation, depletion and amortization expense decreased $1.3 million during the six months ended June 30, 2026, as compared to the same period in 2025. The decrease in both periods was primarily due to assets sold since the prior period, partially offset by new hospitality and commercial assets placed in service. Depreciation is a non-cash, GAAP expense, which is amortized over an asset’s useful life, while maintenance and repair expenses are period costs and expensed as incurred.

Investment income, net primarily includes (i) interest, dividends and accretion income accrued or received on our cash, cash equivalents and other investments, (ii) interest income earned on the time deposit held by SPE and (iii) interest earned on notes receivable, our unimproved land contribution to the unconsolidated Latitude Margaritaville Watersound JV as home sales are transacted in the community and other receivables as detailed in the table below:

Investment income, net during the three and six months ended MarchJune 31,30, 2026 and 2025, were comparable.

Interest expense decreased $0.7$0.9 million, or 9.0%,11.5%, to $7.1$6.9 million during the three months ended MarchJune 31,30, 2026, as compared to $7.8 million in the same period in 2025. Interest expense decreased $1.5 million, or 9.7%, to $14.0 million during the six months ended June 30, 2026, as compared to $15.5 million in the same period in 2025. The decrease in interest expense is due to repayment of project financing and a decrease in interest rates from the prior period. See Note 8. Debt, Net and Note 15. Other Income (Expense) Income,, Net for additional information regarding project financing.

OtherMiscellaneous expense, net during the three and six months ended MarchJune 31,30, 20262026, primarily includes expense of $0.5 million related to design costs for certain commercial assets that we are no longer pursuing, as well as loss on early extinguishment of debt and 2025,fees wererelated comparable.to loans. Miscellaneous expense, net during the three and six months ended MarchJune 31, 2026 and30, 2025, primarily includes loss on early extinguishment of debt,debt as well asand fees related to loans.

Income tax expense was $4.5$14.1 million during the three months ended MarchJune 31,30, 2026, as compared to $5.8$9.9 million during the same period in 2025. Our effective tax rate was 25.3%25.6% for the three months ended MarchJune 31,30, 2026, as compared to 25.8%25.0% during the same period in 2025.

Our effective rate for the three and six months ended MarchJune 31,30, 2026 and 2025, differed from the federal statutory rate of 21.0% primarily due to state income taxes, nontaxable or nondeductible and other differences. See Note 11. Income Taxes for additional information.

Three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025

Homesites. Revenue from homesite sales decreasedincreased $7.4$8.6 million, or 24.3%,28.4%, during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to the mix and number of homesites sold per community and the timing of homebuilder contractual closing obligations in our residential communities. During the three months ended MarchJune 31,30, 2026 and 2025, the average base revenue, excluding homesite residuals, per homesite sold was approximately $121,000 and $114,000,$122,000, respectively, due to the mix of sales from different communities.respectively. Revenue includes estimated homesite residuals of $1.7$10.8 million and $1.1$1.2 million during the three months ended MarchJune 31,30, 2026 and 2025, respectively. The increase in estimated homesite residuals was due to the mix and number of homesites sold in specific communities during the current period. Gross margin was 46.3%47.3% during the three months ended MarchJune 31,30, 2026, comparablecompared to 45.9% in the same period in 2025. Gross margin may vary each period depending on the location of homesite sales.

Homes. During the three months ended MarchJune 31,30, 2026, we sold sixfifteen completed townhomes within our Watersound Villas on the Fairway community for a total of $3.1$8.2 million, resulting in a gross margin of 32.3%.35.4%. During the three months ended MarchJune 31,30, 2025, we didsold notten havecompleted anytownhomes homewithin sales.our Watersound Villas on the Fairway community for a total of $5.5 million, resulting in a gross margin of 36.4%.

Other revenue includes tap and impact fee credits sold, marketing fees and other fees. Other revenue includes estimated fees related to homebuilder homesite sales of $0.6$1.5 million and $0.5 million, during the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Investment income, net primarily consists of interest earned on the unimproved land contribution to our unconsolidated Latitude Margaritaville Watersound JV as home sales are transacted in the community. Investment income, net decreased $0.3 million during the three months ended March 31, 2026, as compared to the same period in 2025, primarily due to fewer home sales transacted in the community during the current period. See Note 4. Joint Ventures for additional information. Interest expense primarily consists of interest incurred on our portion of the total outstanding CDD debt. See Note 8. Debt, Net for additional information.

Equity in income from unconsolidated joint ventures includes our proportionate share of earnings or losses of an unconsolidated JV accounted for using the equity method. Equity in income from unconsolidated joint ventures decreased $7.6$3.4 million during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. The decrease was primarily due to the decreased volume of home sale transactions and a lower average sales price, partially offset by higher average margin per home sold during the current period related to our unconsolidated Latitude Margaritaville Watersound JV. The Latitude Margaritaville Watersound JV completed 8386 home sale transactions during the three months ended MarchJune 31,30, 2026, compared to 192137 home sale transactions during the same period in 2025. See Note 4. Joint Ventures for additional information.

Three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025

The following table sets forth details of our hospitality segment consolidated revenue and gross profit (deficit):

Revenue from our clubs increased $3.2$3.4 million, or 16.3%,13.5%, during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. The increase in revenue was due to an increase in membership dues, membership ancillary spend and Camp Creek Inn lodging and ancillary spend. As of March 31, 2026, Watersound Club had 3,647 members, compared with 3,498 members as of March 31, 2025, a net increase of 149 members. Our clubs gross margin was 39.9%45.8% during the three months ended MarchJune 31,30, 2026, compared to 38.3%43.3% during the same period in 2025. The increase in gross margin was primarily due to stabilization of the Camp Creek Inn and improvements in management of operating expenses.

Revenue from our hotel operations increased $1.7$1.6 million, or 9.6%,4.1%, during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025. The increase was primarily related to an increase in ADR, occupancy, as well as guest incidental spend. Our hotels gross margin was 8.2%39.8% for the three months ended MarchJune 31,30, 2026, compared to a negative gross margin of 1.1%37.5% during the same period in 2025. The increase in gross margin was primarily due to stabilization of the properties and improvements in management of operating expenses.

Revenue from other hospitality operations increased $0.2$0.4 million, or 9.1%,8.5%, during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, primarily due to increased revenue from our standalone restaurantsmarina and marinaretail operations. Our other hospitality operations gross margin was 8.3%25.5% during the three months ended MarchJune 31,30, 2026, compared to a negative gross margin of 4.5%21.3% during the same period in 2025. The increase in gross margin was primarily due to improvements in management of operating expenses.

Real estate revenue during the three months ended MarchJune 31,30, 2026, includes the sale of a vacation rental property for $3.6 million, resulting in a gross profit of $2.3 million (or gross margin of 63.9%). Real estate revenue during the three months ended June 30, 2025, includes the sale of a hospitality property for $1.4 million, resulting in a gross profit of $0.6 million (or gross margin of 42.9%).

Interest expense primarily includes interest incurred from our hospitality project financing. The decrease of $0.4$0.5 million in interest expense during the three months ended MarchJune 31,30, 2026, as compared to the same period in 2025, was primarily due to repayment of project financing and a decrease in interest rates from the prior period. See Note 8. Debt, Net for additional information.