Revenue and Income - For the three months ended June 30, 2023, total revenue decreased to $25.5 million from $40.7 million for the same period in 2022, representing a decline of approximately 37.5%[175] - For the six months ended June 30, 2023, total revenue decreased to $42.3 million from $67.6 million for the same period in 2022, a decline of approximately 37.5%[190] - Interest income decreased significantly to $0.4 million from $4.2 million, a decline of approximately 90% due to reduced average balances of performing loans[176] - Interest income decreased significantly to $1.5 million in the first half of 2023 from $9.1 million in 2022, representing a decline of approximately 83.6%[191] - Other income increased to $11.7 million from $8.9 million, a rise of approximately 31.4%, primarily driven by dividend income from Safe[177] - Land development revenue dropped to $11.8 million from $24.4 million, a decrease of approximately 51.7%, due to lower sales from Magnolia Green and Asbury Park properties[179] - Land development revenue dropped to $21.4 million in the first half of 2023 from $39.3 million in 2022, a decrease of about 45.5%[194] Expenses and Losses - The company reported a net loss of $89.9 million for the three months ended June 30, 2023, compared to a net loss of $20.9 million in the same period of 2022[175] - General and administrative expenses for the three months ended June 30, 2023, were $7.6 million, compared to a recovery of ($2.1) million in the same period of 2022[183] - General and administrative expenses increased to $21.7 million in the first half of 2023 from a negative allocation of $1.1 million in 2022, reflecting a significant change in expense structure[198] - The provision for loan losses was $1.6 million for the six months ended June 30, 2023, compared to $22.7 million for the same period in 2022, indicating a reduction of approximately 92.9%[199] Investments and Assets - As of June 30, 2023, the aggregate carrying value of the Asbury Park Waterfront investment was approximately $166.6 million[163] - The aggregate carrying value of Magnolia Green assets was $81.9 million as of June 30, 2023, with 1,868 residential lots sold to homebuilders[166] - The fair value of Safe Shares was $320.9 million based on a closing price of $23.73 as of June 30, 2023[173] - Earnings from equity method investments rose to $30.2 million in the first half of 2023, up from $21.5 million in 2022, an increase of approximately 40.8%[205] - Unrealized loss on equity investment amounted to $(166.9) million as of June 30, 2023, reflecting the adjustment to fair value of Safe Shares[190] Cash Flows - Cash flows used in operating activities improved to $(4.7) million in 2023 from $(19.2) million in 2022, a positive change of approximately 75.5%[211] - Cash flows provided by investing activities increased to $128.9 million in 2023 from $59.3 million in 2022, a growth of approximately 117.5%[211] Debt and Interest Rate Risk - As of June 30, 2023, the company had $115.0 million in principal amount of floating-rate debt obligations outstanding and $54.9 million in cash and cash equivalents[228] - The estimated change in net income due to a 100 basis points increase in interest rates would result in a decrease of $601,000[228] - The company performs a quarterly comprehensive analysis of its loan portfolio, assigning risk ratings from "1" (lowest risk) to "5" (highest risk)[216] - The company considers a loan to be non-performing when interest payments become 90 days delinquent or if management determines it is probable that the loan will not be collected[219] - The company monitors interest rate spreads and may implement hedging strategies to mitigate interest rate risk, including interest rate swaps and caps[226] - The base interest rate scenario assumes a three-month SOFR rate of 5.27% as of June 30, 2023[227] - The company’s operating results are significantly affected by changes in interest rates, which could materially impact profitability[224] Asset Impairment and Valuation - The company has established detailed policies and control procedures to ensure consistent application of valuation methods for financial reporting[214] - Impairments of real estate and land development assets are recorded in the "Impairment of assets" section of the financial statements when applicable[222]
Star (STHO) - 2023 Q2 - Quarterly Report