It's 9:00 A.M., so we're gonna go ahead and get started. First of all, thank you for being here this morning on a rainy morning. I'm Jorge Gonzalez, President, Chief Executive Officer, and Chairman of the Board of The St. Joe Company. It is my pleasure to welcome you to the 2026 annual shareholder meeting. In accordance with the notice of meeting, I officially call the meeting to order right at 9:00 A.M. Central Time, 10:00 A.M. Eastern Time. We will conduct this meeting in accordance with the agenda you were given when you registered this morning. If you have not registered, please do so at this time at the table just outside of the door. On the reverse side of the agenda is a list of the rules of conduct for this meeting.
To ensure an orderly meeting, we require all participants to abide by these rules. After the formal business portion of the meeting has been adjourned, we will have a presentation, and then we will provide an opportunity for questions and answers. Only validated shareholders may ask questions in the Q&A session. Out of consideration for others, please limit yourself to no more than two questions. We'll answer as many questions as time allows. Now I would like to introduce the other members of the board, those present in person, Mr. Howard Frank. Ms. Elizabeth Franklin. Ms. Rhea Goff. We have Mr. Cesar Alvarez joining us through video. He's actually waving. You can see him on the screen. Mr. Tom Murphy is unable to join us this morning.
Also with us today is Josh Nixon of Grant Thornton, the company's independent registered public accounting firm, who will be available to answer any appropriate questions during the Q&A. The company's Chief Legal Officer, Lisa Walters, will act as the secretary of the meeting. We're being assisted today in the tabulation of proxies and ballots by Mr. James Hagan, agent for Broadridge Financial Solutions. At this time, I appoint Mr. James Hagan as Inspector of Elections. The notice of the meeting has been mailed to each shareholder of record as of March 18th, 2026. The Inspector of Elections has informed me that 52,079,637 shares of the company's voting stock are present in person or by proxy, constituting a quorum for today's meeting.
A list of shareholders on March 18th, 2026, the record date, is available and may be inspected during the meeting by any shareholder who has signed in. The final report of the Inspector of Elections will include the votes, if any, of shareholders present and voting during today's meeting. The company's mailing agent, Broadridge Financial Solutions, has provided an affidavit of mailing to show the notice of the meeting was given on or about March 31st, 2026.
A copy of both the notice and the affidavit will be incorporated into the minutes of this meeting. Description of the proposals. Next, I will describe each proposal to be acted upon today, and then we will take the vote. Since no director nominations or proposals for business were properly filed by a shareholder in advance of this meeting, the business of this meeting is limited to the following three proposals.
The first proposal before the shareholders is the election of six directors to serve for a one-year term until the next annual meeting. I am standing for re-election as a director today, along with the following nominees, Cesar Alvarez, Howard Frank, Elizabeth Franklin, Rhea Goff, and Thomas Murphy. We recommend the election of these nominees. The second proposal is the ratification of the appointment of Grant Thornton as our independent registered public accounting firm for the 2026 fiscal year. The audit committee retained the services of Grant Thornton to audit the company's financial statements for 2026, and the board recommends that the shareholders ratify the appointment of Grant Thornton.
The third proposal is a proposal to approve on a non-binding advisory basis the compensation paid to our named executive officers, as described in the compensation discussion and analysis section, the compensation table, and related narrative disclosure set forth in the company's 2026 proxy statement. We recommend approval of the compensation of our named executive officers. We will now vote on the proposals. Those shareholders voting in person should now mark their ballots. If you have previously voted by proxy, you do not need to vote again today unless you want to change your vote.
If you would like a ballot, please raise your hand, and one will be provided to you. Okay. The Inspector of Elections will now collect any outstanding ballots. Okay. Thank you. Since everyone wanting to vote by ballot has done so, the polls are now closed. The result of the voting. Will the Inspector of Elections please report the result of the balloting when you're ready?
Mr. Chairman, this initial tally is subject to verification, and the final tabulation may reflect small changes in the vote I will announce. The final tabulation will set forth in the formal report of the Inspector of Election to the Secretary of the Company, which will be made after the count has been verified. I certify that a majority of the votes cast has voted for the election of each of the nominees as director of the Company. In addition, the votes cast favoring the ratification of the appointment of Grant Thornton has exceeded the votes cast opposing the action. The proposal to approve the compensation of the named executive officers has received more votes for than against. Thank you, Mr. Chairman.
I hereby declare that the director nominees have been duly elected, that the appointment of Grant Thornton as the company's independent registered public accounting firm has been ratified, and that shareholders approve the compensation of the named executive officers. On a personal note, I believe this is Mr. Hagan's last meeting with us.
Yeah. Yeah. I will be retiring. I've done this for 17 years.
Yeah.
I think it's time.
Thank you. Thank you for all the service. We appreciate it. This concludes the official business of the 2026 annual meeting. The annual meeting is adjourned. We'll now continue to the informational portion of our meeting today. Before the market opened this morning, we filed a Form 8-K and attached an investor presentation that I'm going to review with you this morning.
We also posted the presentation in the investor relations portion of our website at joe.com. For those listening online, you can follow along as we go through the presentation. After the presentation, we'll have a question and answer session. We also have bound booklets that most of you have already opened, in your seats, so you can follow along and actually keep that and take that with you after the meeting is over. Slide one, consistent business strategy.
We always start our presentation by outlining our business strategy. We always want to provide clarity on what we're doing and why we're doing it. The first one is expand the portfolio of recurring income. The second one is develop residential communities with long-term scalable and repeatable revenue. The third one is to execute a multifaceted capital allocation strategy, with CapEx, capital expenditures for business growth, stock repurchases, and debt reduction. Then the final one is to execute a steady and growing dividend program. Slide number two is the framework of how the company's positioned. We show this slide in our presentations also. These are high-level numbers, so there's not a lot of movement year to year, but it's a good reminder of the framework that the company has to work with.
We own 165,000 acres, 87% of which are located in three counties: Bay, Walton, and Gulf. We have entitlements or rights to develop for over 170,000 residential units and over 22 million sq ft of non-residential. The majority of the current revenue is derived from less than 2% of those landholdings. The next set of slides are our financial slides. We include these slides every year, and we include this time period from 2016 - 2025 or the preceding year, 'cause that's a time period that we've been executing that business strategy that I just went over. We get a lot of good feedback, positive feedback about these slides, 'cause it shows the trajectory in that time period when we've been executing the business strategy, and it's all in one place.
A lot of prospective shareholders, they have one quick place to go to to get a quick snapshot of the trajectory. This is the first one of the financial slide. It's slide three, which is our balance sheet. I think everybody knows this, but I still get unusual questions from time to time. The balance sheet is based on book basis or historical cost basis, not market. The one small dip that you can see in 2025 in the balance sheet, that was primarily because of the sale of the Watercrest Senior Living property in the third quarter of last year. The next slide is revenue. This is the combined, consolidated, and unconsolidated revenue for the company in that same time period.
For 2025, our combined revenue, consolidated and unconsolidated, was $858.5 million. That consists of $513.2 million of consolidated revenue and $345.2 million of unconsolidated. That 858 is essentially $513 million of consolidated revenue, which was the highest consolidated revenue number we've had in 19 years, not counting 2014 when we had the one-time sale, timber sale. 19 years ago, we were a totally different company. 19 years ago, we primarily sold bulk land, and our reoccurring revenue at that time was 15%. Today, we're at 60%. It's a pretty significant transformation of the company, going from 15% recurring revenue to 60%.
Something else I wanted to point out about this slide is our revenue by segment. 32% is residential, 43% is hospitality, and 23% is commercial. The compound annual growth rate for this time period in our combined revenue is 27%. Slide number five is our EBITDA. We do have a calculation in slide 28, very traditional calculation of EBITDA. The compound annual growth rate is 27%, which was a little bit higher than last year when we showed the same slide, which was at 26%. Net incomes tends to be a little bit more lumpy because it includes other measures like depreciation, which is a non-cash item. We did have a 56% increase in net income year-over-year.
The compound annual growth rate is 25%, up from 21% when we had this slide last year. Slide number seven, earnings per share. This follows very similarly to the revenue slide, $2 per share. It's the highest we've had in 19 years, not including 2014 with that one-time timberland sale. The compound annual growth rate is 28%, up from 25% when we had this slide last year. Something I wanted to point out, shares outstanding, 'cause obviously this share is a calculation of weighted average shares outstanding, with net income attributable to the company. In 2024, we had 58.3 million outstanding shares. As of May 11th, of this year, we have 57.1. That's a little bit over a million-share reduction.
Depreciation is something we track, and we include in these financial slides, cause we do build assets that we bring into service, and this is just a tracking of the growth and depreciation, which, as a reminder, is a non-cash item. Net income is reduced by depreciation. You can see kind of the growth of the company and the assets that we have built and brought into service. Slide nine, free cash flow. This is where we take our net income, add back depreciation since it's a non-cash item, and then subtract sustaining capital, sustaining capital is the capital that we need to maintain our existing properties. For 2025, going through that math, our free cash flow was $158 million.
That's compared to 2024 with the same calculation where the free cash flow was $112 million. We had an increase from $112 to $158 of free cash flow. The next slide that we also track with this set of financial slides is project-level debt. That's all essentially the only debt we have, project-level debt. The assets stand on their own cash flows. Everything in this chart is in the right direction. Everything improved from last year. Debt is now 25% of the company's total assets. Last year was 28%. The average weighted effective interest rate is now 4.7%. Last year it was 4.8%. This year, 82.7% of outstanding debt is has a fixed or swapped interest rate.
Last year was 73.8%. The average remaining life in years is 19.7%. Last year was 18.8%. As we've mentioned several times, the strategy with our debt reduction execution is to focus on shorter duration, higher variable interest rate debt. That focus is essentially what's led to the improvement that you see in this slide when compared to last year. Capital allocation. This is a snapshot of capital allocation from January 1, 2015 to through the end of the first quarter of this year. There's been a total of $2.2 billion that has been allocated in this timeframe, and you can see the breakdown by the major categories. 64% of that $2.2 billion was allocated to for capital expenditures for growth.
30% of that $2.2 billion was allocated for share repurchase, and then 5% was allocated for dividends. Speaking of stock repurchase, we wanted to show a snapshot of stock repurchase that we've had year-to-date. This is for the first quarter, which we've already reported and we've disclosed, and then this also includes the month of April and through May 11th, which was yesterday, the settlement date through yesterday. This is very current. This is the first time we've disclosed the numbers for April and then through settlement date of yesterday. For this time period, January 1 through May 11th of this year, we have repurchased 390,437 shares, totaling $25.8 million.
For the same period of time last year, January 1 through May 11th, we repurchased 198,214 or $8.9 million. That's a pretty significant increase for the same period of time. As a reminder for last year, the full year, the company repurchased 798,622 shares for $40 million. The next slide is as we have grown, and we have, obviously over this period of time, we have still kept a focus on efficiency. We've kept a focus on overhead, SG&A. This is a slide that we have in our presentation every year, which tracks corporate and other operating expenses, what we call overhead as a percentage of consolidated revenue. When we started our journey, that number was at 24%.
Last year, we were at 5%. That's a pretty significant downward trend in the right direction. This is one of the few line graphs that we like the trajectory being downward. We actually had a decrease year-over-year from 6% to 5%. Let's talk about the future. The next set of slides, we're gonna take you through kinda where we are in planning and executing the next set of projects. This slide 14 is all the approved Detailed Specific Area Plans or DSAPs. As a reminder, in our sector plan, the final step is to obtain approval of a DSAP from each respective county commission, Bay or Walton County. They have full public hearings.
The reason why DSAPs are significant to us is that's really the last step that we need to obtain approval for before we get into the development orders and development permits, where we can break ground on projects. The DSAPs are a minimum of a thousand acres, and they're mixed use. We have both commercial and residential. The numbers that you see here in terms of the residential units and commercial square feet, we also have the ability to move those numbers around based on market conditions. If we see an opportunity for any specific DSAP to do more residential, we can swap commercial square feet and do more residential and vice versa. This is a good baseline of what each DSAP is approved for. We have 10 approved.
We have three that we started, and then we have seven that we have not started yet. I'm gonna take you through where we are with all of these 10 DSAPs. These slide 15 shows the three slides, the three DSAPs that we have started. The Bay County DSAP one, which is, of course, Latitude. Walton County DSAP two, which is Watersound Origins West. The third one is Ward Creek, which include those three communities along State Road 79, Bayside, Breakwater, and Salt Grass. Slide 16 shows the DSAPs that we have planned to break ground, start development, in late 2026, early 2027. Late this year or early next year. The variability is obviously the time to permit with the local jurisdictions and state and federal jurisdictions.
We have these two DSAPs planned to start this year late or early next year. One is Pigeon Creek, which is the DSAP that we made an announcement early this year. We executed a contract with PulteGroup, the third-largest home builder in the country. This is their first entry into this market. By the way, Pigeon Creek is not the name of the community. Howard has asked me before, make sure it's not Pigeon Creek. That's just a placeholder name we use for the names of the DSAPs. The community will have its own brand name. The second DSAP is Teechi. Again, that's just a placeholder name. We also plan on starting that DSAP either late this year or early next year. Slide 17.
These are DSAPs that we have planned to start in the middle part of 2027 of next year. There's three of them, West Bay Creek, which is just to the west of Latitude, West Laird and Lake Powell. Those are the two other DSAPs, so a total of three that we're planning on starting in the middle part of next year. I mentioned in the, I believe in the Q1 earnings release that we had obtained approval from a utility provider for a utility corridor. I know that's not exciting. It's not sexy. Water and sewer is not exciting, but it's a necessity for what we do for a living. When you have utility corridors that span a long distance, it takes a long time to negotiate those agreements with utility providers.
We were happy to report in the first quarter that we obtained an approval, an agreement for a utility corridor that's essentially gonna allow us to get forward, get moving with those two DSAPs, West Laird and Lake Powell. The last one are DSAPs that we have planned. This totals the 10. In going through these three slides, these are all 10 that we have approved. These are two DSAPs that we don't have an exact timeframe yet of when we're gonna get started. So the start date is to be determined. That's the Walton County DSAP two, which is to the west of Origins West, and then West Bay Crossings, which is in that intersection of State Road 79 and Philip Griffitts Sr. Parkway. With these last two, that includes all 10.
I hope that gives you a pretty good snapshot of where we are timing-wise, what our expectations are in terms of where we're planning on commencing these new DSAPs. It goes without saying that we also have many other DSAPs that we have not submitted for approval yet, and those are decisions that we'll make along the way as we execute these 10 DSAPs that we have approval. We have a couple others that are probably getting close to where we'll probably seek approval for those too. Our residential homesite pipeline. We show this as an assembly line 'cause that's the way it feels like to us. We have many active residential communities where we're actively developing, selling homesites, spanning a pretty broad range of price, demographic, consumer product type.
The seeding and harvesting cycle for residential infrastructure that's needed to monetize lots and close on lots, it's a one to two-year cycle. It's not a snapshot. It's not one moment in time, so we think of it as an assembly line, particularly in our large scalable communities where we have multiple phases. We have to constantly be feeding the assembly line, and these are just to give you an idea of the general steps or the general stations in the assembly line. Currently, through the end of the first quarter, we have 23,653 units in what we call in production in the assembly line.
The first stop in the assembly line is a concept plan, an actual site plan, master plan that gives us a really good feel for the yield of the land, how many units we can do, what the geometry of the infrastructure's gonna be in terms of the road network. The next step or station in the assembly line is engineering and permitting. This gets very exact. We go from conceptual planning to very exact set of engineering, construction documents. We have 3,840 units in that station. The next station is platted or under development, where the infrastructure is being developed. By infrastructure, I mean horizontal infrastructure, roads, water, sewer, natural gas, stormwater facilities. We have 1,762 units in that station.
Of course, the last station is our favorite, which is closings. The text box on the right-hand side, as of March 31st, we have 3,204 homesites under contract. That's a significant increase from last year, where we had 952. It's a 237% increase, and that was primarily, not exclusively, but primarily because of the contract that we executed with PulteGroup for Pigeon Creek, which was a really big deal to have a new third national home builder coming to our market. They wouldn't come to our market unless they saw the growth, unless they saw the opportunity. We do have 18 active home builders in our builder program. This is a map showing all the residential communities that comprise that pipeline.
If you look at the previous slide 20 is a residential homesite pipeline, a map of all the residential communities that are in that residential homesite pipeline. You can see we have a pretty wide range of locations, again, consistent with what I said earlier. We have a pretty wide range of pricing, product type, consumer that are moving into these communities. The next slide we haven't shown before. It's same concept, but this is our commercial leasing pipeline. We tend to think of this a little bit different than a pipeline, than a assembly line. That's why we didn't show it in assembly line form, 'cause these are more discrete projects and properties. We have a total of 3.9 million sq ft in the commercial leasing space pipeline.
The first step or the first station in that pipeline, similar to the residential homesite pipeline, is where we have a concept plan. We have a site plan, a master plan, where we have a really good feel for the geometry of the property, of the commercial asset. We feel we can accommodate those sq ft . We have 2.6 million sq ft in that initial station, which is 3 x the size of our existing commercial leasing portfolio. The next station in the pipeline is sq ft under construction or planned to be under construction this year. That's 110,000 sq ft , and that's broken down by 69,134 sq ft that we actually have under construction today at this moment.
We're gonna have an additional 41,000 sq ft that we're gonna have under construction before the end of the year, and we feel pretty confident that we'll commence construction of those additional 41,000 sq ft. Of course, the last station is the actual existing leasing portfolio, which consists of 1.2 million sq ft. As of March 31st, 96% of that 1.2 million sq ft was leased. That's a pretty good percentage. That 96% leased percentage consists of approximately 250 individual leases. 350 individual commercial leases. This leasing, this slide, this segment, this leasing pipeline segment represents a generation of $8.2 million in revenue per quarter.
As of the end of the first quarter of this year, margins were 73.2%. This is a part of a portfolio that we wanna continue to grow. I get asked questions often about the timing of growing this portfolio, and I wanna give you a little bit insight into that. Our strategy is to have full buildings paying the maximum lease rate. There's a timing component of that, right? 'Cause we can build a lot of buildings without looking at the timing of when they're gonna get leased, when they're gonna get occupied, but we don't think that's in our best interest.
We're constantly calibrating the demand 'cause we wanna make sure that when we build these buildings in this commercial leasing portfolio, we're maximizing the lease rate, and we're maximizing the occupancy. The good news is we're getting phone calls from national retailers, national apparel brands that we didn't get years ago. We used to have to call them. Now they're calling us. That's indicative of the growth of the market, of the maturation of the market. In terms of our commercial leasing portfolio, we have the ability to ramp up. We have the ability to throttle up if that, if we feel that balance between starting construction and having a commitment to lease is there.
I want to give you a kind of a feel for how we think about the strategy and the timing of growing this commercial leasing portfolio. Right now, the 3.9 million sq ft , when we include what we have under planning, we feel pretty good about that size. That's a very realistic number to reach. Again, we're not going to do it recklessly, where we have a bunch of empty buildings, and then we have to reduce the lease rate. We want to maximize lease rate and always have a very high occupancy rate. This is a map, slide 22, of those commercial properties. It doesn't include all the existing, so the 1.2 million, it doesn't include all of those because those are really scattered all over the place.
This is primarily the ones that are still active, and we're gonna be developing and adding. Slide 23. The two most active for us, and the ones that have the two that have the most energy are the Watersound Town Center, which is in front of Watersound Origins, West Bay Center, which in front of Latitude. I'm gonna show you a little bit more detail about each one of those two. Slide 23 shows the Watersound Town Center. We have 400,000 sq ft planned, 155,962 sq ft completed. That's about 39% of what we have planned is completed. Of what's completed, we have 98% leasing occupancy. That's a pretty good number. 98%, that's nearly 100%.
You can see in this site plan, the buildings that are shown in blue are completed. Those are the buildings that comprise the 155,962 sq ft number. We have one building shown hatched in blue and white diagonal lines. That's a building that we have completed the shell. We're currently in the process of working with tenants to do the tenant improvements. That building was essentially pre-leased before we finished the shell. This is one of the buildings where we're kind of focusing on national apparel brands. Like I said, we're getting a lot of phone calls from those retailers. They all want to be kind of together. We've announced some.
There's a lot of others we haven't announced yet, but we're pretty excited about the energy that we have with those retailers in the Watersound Town Center. The two buildings shown in orange or red, those are two buildings that we're currently in design permitting, and we're gonna start construction of those two buildings this year. Slide 24 is the West Bay Center. The orientation of this one, 'cause we try to orient everything north to south, but this is a long rectangle, this is oriented differently. The north is to the left of this site plan. You can see State Road 79 right at the top. Latitude is essentially to the west, it's kinda down the lower part of this site plan. This one has a lot of energy right now.
We have planned this for 500,000 sq ft. We have about 15,000 completed. We have 84,000 sq ft currently under construction or planned to be in construction in 2026. You can see, in terms of the color convention, the dark blue at the very top or the left-hand side of the site plan, those are completed. We have that L-shaped building with the diagonal lines that, similar to the Watersound Town Center building, we completed the shell. We're currently working on tenant improvements in that space. We've got pretty good momentum on pre-leasing that building. The orange or red are the buildings that we've already started construction or we're gonna start construction before the end of the year.
The big one, which we announced a few months ago, is we started construction of the Publix. Which has been long anticipated in the Latitude community. I believe we may be pouring footers this week or next week of that building. The progression has been going very, very well. It's a footprint. That Publix is very similar to the Publix here in front of the Watersound Town Center. It's one of the bigger Publix footprints. We enjoy a great relationship with Publix. We deal with them directly. We don't have a broker or middleman. We affectionately refer to them as Lakeland. They've been a really good partner with us, they're our top grocery store for our communities.
One thing I wanted to mention too, that this is 500,000 sq ft . We also have a portion to the south, the extreme south portion of this master plan that we can do an additional 200,000 sq ft . This would be a total of 700,000 sq ft , which is a lot. Just to give you a sense of scale, if you're familiar with Pier Park North, where we have Dick's and The Fresh Market as our anchor tenants in the end caps, that's 320,000 sq ft . This is 700,000 sq ft . The growth potential of this center is pretty significant. We are not planning it and designing it as a big power center with a big building.
We wanna create that villagey, walkable feel. As you can see from this site plan, we have a boulevard road plan with on-street parking, smaller scale buildings fronting on that boulevard, and then parking in the back of those buildings. This has tremendous potential, and this is one that we can very easily throttle up as demand continues to grow. Slide 25. Speaking of Latitude is unconsolidated joint venture, and it's a unique joint venture. Last year, we broke down the components of the cash flow to explain how it works. This is an update of that slide.
Latitude, we have 3,700 homes that have been planned, 2,273 are completed as of the end of the first quarter, so that's about 61% of the homes are completed. The initial capital contribution of each partner was $11.7 million. Earnings for each partner have been $92.1 million. Compared to last year, March 31st, 2025, that number was $67 million. In addition to the cash flow generated from the actual operations and transactions, we have also been paid for contribution of the raw land, $22.3 million. That's on top of the $92 million. It's got some moving pieces to it, but you can see why we made the decision to do this joint venture as opposed to just selling the land.
If we had just sold the land to a builder, the cash flow and the monetization of that would not have been anywhere near what this is. We've been very happy with this joint venture. We've been very happy with the community. We think it's a great community. I was there Sunday. I was driving around, and there was a lot of happy people in golf carts, eating and drinking and having a great time. We're very happy with our partner. Minto has been an exceptional partner.
Something that I wanted to show this year, when we made the decision, when our board of directors made the decision, to move forward with this joint venture, we were focused on the cash flows, obviously, which by the way, the reality has far exceeded what we had originally projected, what we had in the original pro forma. Cash flows was the core reason why we made the decision, but we also had, other reasons why we made the decision to move forward, with this joint venture. At the time, this land was literally in the middle of our sector plan and had the least amount of energy. There was just pine trees everywhere. There was nothing going on.
We made the decision to move forward with this joint venture, again, in addition to the cash flows that we thought it would produce, 'cause we wanted to energize that part of our land holdings, and Latitude has done that. When we made the decision on the Latitude joint venture, in addition to the cash flows, we were thinking about three different things. That energy of consumers and homes, that would generate demand for our commercial segment, West Bay Center, which I kinda gave you a snapshot of that. That was important to us, 'cause that was an investment we're making in a joint venture that has great cash flows, but in addition to that, it's creating consumers that we can monetize in our commercial segment. Similar in our hospitality segment.
As everybody knows, we're working on a, on a, really, tremendous marina concept on the Intracoastal Waterway. It won't just be open to Latitude residents, but we anticipate a lot of Latitude residents will take advantage of that marina. The third component is business services. As you've seen in our, over the last year in our earnings releases, we've been talking a little bit more and more about what we call our asset-light businesses, Watersound Real Estate, Watersound Insurance Agency, and Watersound Title Agency. All three of these benefit significantly from this joint venture. We're constantly thinking of adding business services to this group, and we have several in the works.
it's something that we're going to continue to add over time. The thing that's not here that's also a reality, Latitude by creating energy in that part of our land holdings was also energy for projects like Pigeon Creek, right? If Latitude wasn't there, it would've been very difficult to execute a contract with PulteGroup for Pigeon Creek. that's another secondary, tertiary benefit of this joint venture, and I would also argue Ward Creek has created some energy also because of Latitude. The last thing I want to go over is what we call the virtuous circle of value creation. We showed this last year and I want to show it again because this is not just a one-time thing we show at an annual meeting. We live this.
Every day, we kinda think about this. When we make decisions to invest in a project, we're constantly thinking about obviously the cash flows, the financials of that project, but we're also thinking about how that project benefits other parts of the company. So, the front porch of our company is our hospitality segment. It's amazing how many people get introduced to the region, get introduced to the company, get introduced to our communities 'cause they stay in one of our resorts. They stay in one of our hotels. As we have guests in our hotels, that exposes the visitors to the lifestyle, the Watersound lifestyle and the high quality of life we have in our region. It creates demand for our residential communities, our apartment communities.
Then when those communities get going, it creates a customer base for the hospitality assets. Somebody gets exposed to our region in one of our communities by staying in a resort, then they decide to buy a home in one of our communities. Then when they buy a home in one of our communities, they decide to join our club. That also creates a customer base for the commercial town center tenants. These are consumers that commercial tenants covet, and that allows us to invest in our commercial segment, our town centers, medical space, office space. Then those commercial town centers become amenities for our residential communities. It enhances the quality of life of the residents in those communities.
Those commercial town centers, and those commercial spaces, they also enhance the experience for our hotel guests, our resort guests, 'cause there's more things to do when they're here, more places to eat, more places to shop. Of course, our hospitality segment, our guests in our hotels become consumers, customers for our commercial segment. This is the way we think of the company literally every day. We think about this every day. It's not just a slide that we put together for the annual meeting. For those of you following online, we're animating this, so we're introducing every time I talk about these components, one shows up one at a time. It's a lot easier to see than the presentation that you're seeing online, where it's just one graphic.
As this virtuous circle is happening, it's also creating a need for public infrastructure. It's creating jobs, and it's accommodating population growth. This is the really most important thing that the shareholders that understand our company the most understand this one point the best. All this is creating value. It's driving value for all of our adjoining land, lands that we own around these properties.
That's not captured in the financials, but that's a very significant component of the company. As the virtuous circle is happening, we're growing revenue. We're growing income. We're growing our communities, our commercial town centers. It's driving the value up of all the adjoining land that we own. That's really important for everybody to remember. That concludes our presentation. This is the non-GAAP reconciliation for EBITDA, and then of course, I'm not gonna read the disclosure that our general counsel does such a great job with every year. With that, I would love to open the floor up for questions.
Hello. As a resident of Latitude and with the influx of the other communities along that Highway 79 corridor, many of us are wondering if St. Joe has any interest in golf course development.
We're always thinking about everything. That's really the short answer, and we've thought about golf in different regions of our land holdings, and that is one of them.
I've got a question. I'm a Latitude Watersound resident also. Well, I'm sorry. I'm a Latitude Watersound resident also. What's going on with the marina? It's pretty much been at a standstill the last 12 months.
We haven't obtained all the permits yet, so the standstill is what it usually is, government. We have obtained some of the permits, and that's some of the work that you've seen. We're gonna move forward with another component of it, and we're gonna start doing that pretty soon. Once we get all the final permits, then we're gonna go full steam ahead.
Hi. First off, I just want to thank you and the team for all you've accomplished since the last meeting, and also all you're doing to prepare for the future. I do not have a real estate background, so it would help for me if you would share your thoughts. I really like that slide on the commercial leasing pipeline. You know, the role of people and partners to make the most out of that pipeline.
Absolutely. We do have partners, joint venture partners. We do have some commercial assets that are part of the leasing portfolio that we have partners. We usually bring in partners because they have a particular expertise, they have relationships. It's usually not because of capital necessarily. We try to be very thoughtful about is there a partner that we can partner with in any segment, but particularly the commercial leasing segment, that can bring value to us in ways that we can't create ourselves. If the answer is yes, then we're gonna move forward with creating a joint venture and partner with that entity.
Well, we always have a couple of those going on, and we have a couple of those going on right now, with partners who are really experts and have a lot of relationships and a lot of expertise in specific lanes of that industry. If we can't find a partner or we think the value we can add by ourselves is the value that's needed at that location, then we'll move forward with that by ourselves. Watersound Town Center, for example, is one that we've been doing on our own, and we did reach that threshold where now national retail, retailers, national apparel brands are calling us. For a while there we tried different ideas about how to kinda get that momentum.
Now we have it, and we're gonna be executing that. In our town centers, we don't incur any project debt, so we don't have to discount lease rates 'cause we have an anchor in any of those buildings, so we charge full rate from the very beginning. Usually they're pre-leased before we start construction. It's a really nice portfolio that's gonna age very well over time. More questions?
Yes. Name is Mark, and I'm also a resident in Latitude. I've got a couple of questions. An easy one. You mentioned home sites under contract, around 3,200. Is that between you and the developer or is that with the consumer, there's 32?
No, that's with our builder partners.
With the developer and yourself.
Yeah.
Then, there's been mention of a second area of Latitude. Any comment on how that's progressing or if that's still in the works?
Yeah, we've, we mentioned early on that if the community was well-received and was successful, which by every measure it has been, that we would try and continue that relationship. We have been in discussion with our joint venture partner about the kind of next phase to the west. There's nothing to report yet, we have been in discussion and we've made really good progress.
Okay. My last question, on Pigeon Creek with Pulte, any insight as to what that development's gonna look like? Is that gonna be more under 55, and will there be infrastructure for schools that's gonna come along with that down the road if so?
Yeah. Pigeon Creek is not gonna be an age-restricted active adult community. The only community that we have for that is Latitude. PulteGroup is still working on the exact product lines. They're gonna have probably four different product lines, not age-restricted, appealing to a wide range of consumers. They could be appealing to retirees, although it's not age-restricted, not gonna be themed that way. They could be appealing to families. It's gonna be a pretty broad range. Probably the closest thing, this is just my perspective and I'm certainly not speaking for PulteGroup, is something similar to Ward Creek. When you look at Ward Creek and you look at the broad range of product type and demographics, there's retirees there's families there's a mixture of both. It's probably gonna be very similar to that.
Do you consider Breakwater part of Ward Creek?
Yeah, yeah. Ward Creek to us includes D.R. Horton on the east side, Fischer Homes and Kolter on the west side, and Toll Brothers on the west side too. In terms of schools, we're always working way ahead of years ahead with our respective school board superintendents, planning, tracking demand, spatially, working with them on needs that they have for additional schools. We're usually way ahead. By the time you see a school break ground, we've been in discussion with that school district for five, six years.
Hey, Jordan here. If that second phase of the Latitude would happen, are the economics with Minto the same or is that part of your discussion?
It's part of the discussion.
Okay.
Part of the discussion.
I guess a follow-up would be: Is there any appetite to do another joint venture elsewhere, or was that just kind of a unique, like you said, it was pine trees at the time, and you guys got obviously a great deal on that? Is that something that you would entertain in the future in another area?
For age-restricted?
Yeah.
Yeah. You know, the future is a long time away, right? We're always open to entertaining. right now our focus is on just that one.
Yeah
in terms of a joint venture for age-restricted community. It's been very successful. We want it to continue to be successful. If there's opportunities in the future, you know, we'll certainly look at those.
Sounds good. Thanks.
Hey, Jorge. I just got a quick question or two. Off of what he was talking about, do you see now that the area has kind of blossomed, and you've brought in a lot of new national builders, the opportunity to either do something with Minto and other people or just open that, I guess, West Bay Creek DSAP up to a lot of the other builders that are now here that have 55+ communities in terms of the product offering to maybe enhance what we're getting out of it?
Yeah. We have 18 active builders, at every moment, in addition to those builders that we report that are active in our program, we're in discussion with five-10 additional builders. Yes. Short answer is yes. We're in discussion with builders on a daily basis almost that wanna come into the market. It takes a process and some time to find a space for them because remember, we have the one-two year seeding cycle for development. Depending on when they come in and start talking to us, there may not be a lane for them right away. We also try to put a lot of thought into where we put them relative to our existing builders, right?
We don't wanna just recklessly think of, "Well, we're gonna add five more builders. Let's put them in here." The builders that are there start cannibalizing each other, right? There's a race to the bottom in terms of margins. We try to be very thoughtful in where we place the builders, so they're complementary to the other builders in that community. Yes, we're constantly talking to many other builders that wanna come to the market, but that's a process of both them and us being thoughtful about where we're gonna place them.
Okay, the last one, I know I've asked you before on it. Is there any update on the 30A West project? Cause again, I've seen the drawings for it. It looks beautiful, but I also look at that and think that that could represent a large chunk of stock being bought back if we chose to go a different route with it. I was just wondering if there was any update.
An excellent question. We're always in discussion, and we're still in discussion with that, on that project. To your point, we're always calibrating the financials of any project, whether it's a joint venture or a project we're doing ourselves with, you know, calibrating it with a broader capital allocation, right? There's an ebb and flow, right? Because market conditions change, cost of construction changes.
We track that over a long period of time, and if we think it makes more sense to allocate capital in other projects or buy shares back or continue to grow a different program, we're gonna do that. That project is one that we've been in that process. Once we conceptualize a project, we just don't put blinders on and go, right? We're always calibrating it just to see where it is, and that's certainly one of those.
Thanks.
Has there been any discussion on the, I guess you could call it the non-core 13% of the acreage and what to do there? I know in previous meetings that's been brought up about maybe timber sales again or something like that. Has that been discussed at all?
Yeah. We do. Essentially, I call it, our land holdings on the east side of the big river, on the east side of the Apalachicola River. Where we have a concentration of land ownership is in Leon County, for example, in Tallahassee. We obviously have a project that preceded us, Southwood, that was done in that community. In Southwood, we made a strategic decision many years ago that we would not invest in developing home sites. We think it makes a lot more financial sense to invest here 'cause we have growth here, we have immigration, we have higher margins. What we're doing in Southwood, 'cause it does have master infrastructure, is we're selling tracts of land to builders. We're not investing any capital to develop home sites.
We're selling tracts of land with entitlements, then the builders will build the infrastructure and build the homes. That's what we're doing in Southwood. We've done that also outside of Southwood in Leon County. You may have seen, we've had two or three land sales over the last couple years to builders. We sell the land to them, they put the infrastructure in, they build the homes. We're gonna continue that strategy. We don't have any perspective of investing capital in that market. I often say we don't sell land, we're a picky seller of land. That's really Bay, Walton, and Gulf, right? In Leon County and some of the surrounding counties that we have some land.
At the right price, we'll sell it. That's key because we do get. To your question about Timberlands, would we sell Timberlands in that market? We would. Now that the company has grown and our financials have grown, as you have seen, we don't have a sense of urgency to sell that land at a low price. We get offers from folks, and they're, you know, they're low ball offers. We don't even respond.
Yeah.
Right. I think, are we out on time? Maybe one more question. Of course.
Thank you. Could you talk, Jorge, it's less of a question, but talk a little bit about healthcare facilities in the area because as we grow, there are all the people that are moving in, what's going on with healthcare and medical facilities and the new hospital that's under construction?
Absolutely. Great question, not just because you're a director. Healthcare to us is as critical to quality of life as anything else. It really is. Without good healthcare, it's hard to have high quality of life. It's not just for one demographic, it's for the entire demographic. We have great healthcare providers in our region. All of them are tenants of ours. We've enjoyed a relationship with them for a long time. They're great folks, great companies, but as our region has grown, we need more of everything, more of everything when it comes to healthcare. We need more general practitioners, we need more specialists, we need more diagnostics, we need more of everything.
One of the a big, bold idea that we had many years ago was to create a medical campus where we would target an academic health center model. An academic health center from all the research we've done, is the most successful healthcare delivery system in the country, where the synergies between teaching, research, and clinical delivery really come to fruition. 'Cause the days of doctors creating an LLC and being in business, those days are kind of in the rear view mirror. Doctors tend to be employees of large, for-profit healthcare companies like HCA, large not-for-profit healthcare companies like Ascension, or employees of academic health centers. There's many examples of academic health centers, and they're usually the kind of the one of the main economic engines in that market, right? Whether it's UAB, right? Shands, NYU.
We created that vision. We master planned the campus, and it's the campus at the southeast corner of 79 and Philip Griffitts. These things are not easy, right? These are big, bold ideas. We engaged in a series of discussions with many potential partners, and those discussions have kinda landed in the first phase of that campus we opened two years ago, the medical office building. That's there, and it's full of clinicians already, and there's a really high-end outpatient surgery center that has already been opened. The second phase is the big deal. The second phase is an actual teaching hospital. We've been working on that very hard with our partners. Again, nothing that has value is easy.
We're there. That hospital's, if you drive by it, you can see the construction. We anticipate that hospital's gonna be open middle part of 2028. The hospital has been master planned and planned for future expansion. Phase I is gonna be probably 100 to 150 beds. That hospital has been planned for almost 600 beds, and with an ability to add wings very easily without disrupting the core operations of the hospital. That's an asset that's gonna be under FSU Health, so Florida State University, their College of Medicine, their research apparatus, which is very robust, that's their asset, and it's gonna be a full-blown teaching hospital. We're gonna have residencies there. That's the plan. That's really important to me.
It's really important to our region, 'cause where docs do residencies, that's where they tend to stay. It's not where they go to medical school. It's not gonna happen right away, it's gonna take a little bit of time, but for us to have a reoccurring pipeline of residencies that go through that teaching hospital is pretty significant, 'cause that's reoccurring, right? Those are not physicians you have to recruit. The goal of this academic health center is to bring resources from outside of the market, right? Bring doctors from outside of the market. I can't tell you, even though all the final mechanics of the deal structure are still being finalized, so there hasn't been a lot of branding that you've seen, right? You drive by there, you don't see FSU Health.
That's gonna change pretty soon when they finalize all the agreements and all the mechanics. Even with very, with no branding and really very little, kind of external communication, I can't tell you how many club members of ours who are physicians in Atlanta, in Houston, in Nashville, call and say, "Hey, let me know about that, because I may have an interest in moving in and being in that facility." That's without any effort, right? Without any recruitment.
I get those phone calls on a regular basis. That, in a way, kinda is a toe in the water proving the concept, right? We're pretty excited about that. It's not just something we're doing to help sell more homes at Latitude. I don't think we need that help. It's something for the community, right? It's a community asset that's gonna help every single demographic in the community, and it's a really big deal. I think we have time for 1 more question. I think you had your hand raised.
Yeah. At last year's meeting, you had mentioned a lake park behind where the Town Topgolf. Is that still?
Yes
ongoing discussions, or where is it?
Yeah, it's beyond ongoing discussions. We have finalized, it's a ground lease, and that's been finalized. We expect to see kind of physical progress on that over the next, you know, few months, year. Okay. Well, great, all great questions. I really appreciate it. You may continue with refreshments on the terrace. The reception at Watersound Beach Club will begin at 12:00 P.M., conclude at 1:30 P.M. Weather-wise, where are we? Are we still good?
Yeah.
Have refreshments on the terrace. We'll have the reception at the Watersound Beach Club. We have a new second-story deck that we just opened, and that's where we're gonna host the reception, so everybody can see it. We'll start that at noon., conclude at 1:30 P.M. We'll have shuttle service from here to the reception starting at 11:30 A.M. You can drive yourself, too, to the Beach Club, of course. There's no formal program. It's gonna be just informal, so you can see the new deck. The shuttle back here will be at 1:00 P.M., 1:20 P.M., and 1:40 P.M.
Then we also, for those of you, there's always a few of you that want to take a self-driven tour, we do have a nice asset map, I think outside on the front desk, that shows all the different properties, different locations. You're welcome to do that. We decided to take a break from the driving tour this year. We have been doing it, I think three years in a row. We're probably going to start it again next year. This year we thought we would do something a little bit more casual since we opened the new deck in the Beach Club. Everybody good? Great. Thank you for coming. I really appreciate it.