BBX CAPITAL, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

The following discussion and analysis should be read together with the Company's
audited consolidated financial statements and related notes included in Item 8
of this Annual Report on Form 10-K, including the basis of presentation for the
consolidated financial statements prior to September 30, 2020 (the date of the
spin-off of the Company from Bluegreen Vacations Holding Corporation) which
reflect combined financial statements of BBX Capital, Inc. and its subsidiaries
and do not necessarily reflect what the results of operations, financial
position, or cash flows would have been had BBX Capital, Inc. and its
subsidiaries been a separate entity or what the results of operations, financial
position, or cash flows will be in the future. The following discussion contains
forward-looking statements, including those that reflect our plans, estimates,
and beliefs. Our actual results could differ materially from those discussed in
the forward-looking statements. Factors that could cause or contribute to these
differences include, without limitation, those discussed below and elsewhere in
this Annual Report on Form 10-K, particularly in Part 1. Item 1A "Risk Factors"
and Item 1 "Cautionary Note Regarding Forward-Looking Statements."



The Management Discussion and Analysis of this Annual Report on Form 10-K
discusses 2022 and 2021 items and year-to-year comparisons between the years
ended December 31, 2022 and 2021. Discussions of 2020 items and year-to-year
comparisons between 2021 and 2020 are not included in this Form 10-K and can be
found in "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2021. Such reports and other
information filed by the Company with the SEC are available free of charge on
our website at www.bbxcapital.com or with the SEC at www.sec.gov.



Overview

BBX Capital, Inc. (referred to together with its subsidiaries as the "Company," "we," "us," or "our," and without its subsidiaries as "BBX Capital") is a Florida-based diversified holding company whose principal holdings are BBX Capital Real Estate LLC ("BBX Capital Real Estate" or "BBXRE"), BBX Sweet Holdings, LLC ("BBX Sweet Holdings"), and Renin Holdings, LLC ("Renin").

As of December 31, 2022, the Company had total consolidated assets of
approximately $562.8 million and shareholders' equity of approximately $334.3
million. Net income attributable to shareholders for the years ended December
31, 2022 and 2021 was approximately $28.0 million and $46.9 million,
respectively.

Impact of Current Economic Issues and the COVID-19 Pandemic

Economic trends in the U.S. and global economies and the industries in which the
Company operates, have impacted the Company by contributing to i) decreased
consumer demand, ii) disruptions in global supply chains, iii) employee
absenteeism and a general labor shortage, and iv) increased economic
uncertainty. In light of the uncertain duration and impact of current
economic trends, the Company has focused on maintaining significant cash
balances.  As of December 31, 2022, the Company's consolidated cash balances
were $127.6 million.



Inflation for the twelve months ended December 31, 2022 was 6.5%, and there has
been broad based price increases for goods and services. The Federal Reserve has
sought to address inflation through monetary policy, including the wind-down of
quantitative easing and by increasing the Federal Funds rate. The Russian
invasion of Ukraine and the related embargoes against Russia, as well as the
impact of the efforts by China to mitigate COVID-19 cases in that country,
worsened supply chain issues with the potential of further exacerbating
inflationary trends. It is possible that the United States and/or the global
economy generally will experience a recession of an uncertain magnitude and
duration as a result of monetary policies addressing inflationary trends and for
other reasons. These conditions can negatively affect our operating results by
resulting in, among other things: (i) higher interest expense on variable rate
debt and any new debt, (ii) lower gross margins due to increased costs of
manufactured or purchased inventory and shipping, (iii) a decline in the
availability of debt and equity capital for new real estate investments and the
number of real estate development projects meeting the Company's investment
criteria, (iv) higher overall operating expenses due to increases in labor and
service costs, (v) a reduction in customer demand for our products, (vi) a shift
in customer behavior as higher prices affect customer retention and higher
consumer borrowing costs, including mortgage borrowings, affect customer demand,
and (vii) increased risk of impairments as a result of declining valuations.



In light of inflationary conditions, we have taken steps to increase the prices
of our products; however, such increases may not be accepted by our customers,
may not adequately offset the increases in our costs, and/or could negatively
impact customer retention and our gross margin. There is no assurance that the
Company's operating subsidiaries will be able to increase prices in response to
increasing costs, which could have a material adverse effect on the Company's
results of operations and financial condition.



BBXRE has experienced a significant increase in commodity and labor prices,
which has resulted in higher development and construction costs, and disruptions
in the supply chain for certain commodities and equipment have resulted in
ongoing supply shortages of building materials, equipment, and appliances. These
factors have impacted the timing of certain projects currently under
construction and the commencement of construction of new projects. Furthermore,
homebuilders have seen a general softening of demand, and the increase in
mortgage rates have had an adverse impact on residential home sales. In
addition, rising interest rates have increased the cost of the Company's
outstanding indebtedness and any financing for new development projects.
Increased rates have also had an adverse impact on the availability of
financing, and the anticipated profitability of development projects, as a
majority of development costs are financed with third party debt and
capitalization rates related to multifamily apartment communities are generally
impacted by interest rates. BBXRE has also recently observed a decline in the
number of potential investors interested in pursuing equity or debt financing
for new multifamily apartment developments and the acquisition of stabilized
multifamily apartment communities. Although such factors have not yet materially
impacted BBXRE's results of operations, we expect that they may have an adverse
impact on BBXRE's operating results in future periods.



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Similarly, as a result of inflationary pressures and ongoing disruptions in
global supply chains, IT'SUGAR experienced an increase in the cost of inventory
and freight, as well as delays in its supply chain. While IT'SUGAR has generally
been able to mitigate the impact of increased costs through increases in the
prices of its products, supply chain disruptions have impacted its ability to
maintain historical inventory levels at its retail locations. To the extent that
costs continue to increase, there is no assurance that IT'SUGAR will be able to
continue to increase the prices of its products without significantly impacting
consumer demand and its sales volume. Further, following difficulties in
maintaining appropriate inventory levels during fiscal 2021, IT'SUGAR increased
the inventory levels at its retail locations in 2022 in an effort to ensure that
it can meet consumer demand; however, in light of current economic conditions,
including a possible slowdown in consumer demand, increased inventory levels
have increased the risk that IT'SUGAR may be unable to sell the products timely
which may among other things result in inventory writedowns. IT'SUGAR has also
experienced an increase in payroll costs as a result of shortages in available
labor at its retail locations.



Global supply chain disruptions and increases in commodity prices have also
contributed to a significant increase in Renin's costs related to shipping and
raw materials, as well as delays in its supply chains, which have: (i)
negatively impacted Renin's product costs and gross margin, (ii) increased the
risk that Renin will be unable to fulfill customer orders, and (iii) negatively
impacted Renin's working capital and cash flows due to increased inventory in
transit, a prolonged period between when it is required to pay its suppliers and
it is paid by its customers, and an overall decline in its gross margin. While
Renin has obtained price increases for many of its products, Renin's gross
margin has nonetheless been negatively impacted by these cost pressures.
Additionally, the negotiation of increased prices with customers increases the
risk that customers will pursue alternative sources for Renin's products, which
may result in Renin losing customers or require it to lower prices in an effort
to retain customers. Increases in interest rates will also adversely impact
Renin's results. Further, Renin has recently observed a decline in consumer
demand, which Renin believes may be attributable to (i) the impact of price
increases and overall inflationary pressures on consumer behavior and (ii) a
shift in consumer spending away from home improvements as the economy has
reopened. In addition, following difficulties in maintaining appropriate
inventory levels during 2021, Renin has increased its inventory levels in an
effort to ensure that it can meet consumer demand; however, in light of current
economic conditions, including a slowdown in consumer demand, such increased
inventory levels have increased the risk of Renin being unable to sell such
products and the risk of inventory writedowns. In addition, as part of Renin's
efforts to mitigate the impact of the current economic environment on its
business, Renin executed a lease agreement for a new manufacturing and
distribution facility near one of its existing locations in Canada, with the
goal of substantially winding down its operations in one of its other facilities
and eliminating other logistics and warehousing facilities.  In connection with
these efforts, Renin expects to incur in excess of $2.0 million related to,
among other things, severance expenses, relocation and freight costs to transfer
inventory, and capital expenditures for new racking for storage and equipment.
However, there is no assurance that these efforts and the related upfront costs,
which Renin believes will reduce its operating costs over time, will result in
the expected cost savings and will not have unanticipated impacts on Renin's
operations, including its ability to meet customer demand.









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Summary of Consolidated Results of Operations

Consolidated Results

The following summarizes key financial highlights for the year ended December 31, 2022 compared to the same 2021 period:

? Total consolidated revenues of $342.0 million, a 9.1% increase compared to

2021.

? Income before income taxes of $42.8 million compared to $64.2 million during

2021.

? Net income attributable to common shareholders of $28.0 million compared

    to $46.9 million during 2021.
  ? Diluted earnings per share of $ 1.81 compared to $ 2.63 during 2021.

The Company's consolidated results for the year ended December 31, 2022 compared to the same 2021 period were significantly impacted by the following:

? A net increase of $16.9 million in BBX Capital Real Estate's income before

income taxes during 2022 as compared to 2021, which reflects (i) the

recognition of a $23.0 million gain on the sale of a land parcel in St. Lucie

County, Florida in December 2022 and (ii) a net increase in equity in net

earnings of unconsolidated joint ventures primarily as a result of sales

activity in 2022, including the Miramar East/West joint venture's sale of its

multifamily apartment communities, the Altis Little Havana joint venture's

sale of its multifamily apartment community, BBXRE's sale of its equity

interest in the Bayview joint venture, and the Marbella joint venture's sale

of single-family homes, partially offset by (i) a decrease in net profits from

BBXRE's sale of lots to homebuilders at the Beacon Lake Community development

reflecting that BBXRE sold 178 developed lots during 2022 compared to

385 developed lots and 299 undeveloped lots during 2021, and (ii) a net

decrease in recoveries from loan losses; offset by

? A net decrease of $15.6 million in BBX Sweet Holdings' income before income

taxes during 2022 as compared to 2021, which primarily reflects the

recognition of a $15.9 million non-cash gain on the reconsolidation of

IT'SUGAR in the Company's financial statements during 2021 as a result of

IT'SUGAR emerging from Chapter 11 bankruptcy in June 2021;

? The net increase of $14.5 million in Renin's loss before income taxes during

2022 as compared to 2021, which primarily reflects (i) a net decrease in sales

as a result of lower customer demand, (ii) a decrease in its gross margin

percentage related to significant increases in costs related to freight, raw

materials, and labor and lower absorption of fixed manufacturing overhead

resulting from a decline in sales volumes, and (iii) higher interest expense;

and

? A net increase of $7.5 million in corporate general and administrative

expenses primarily related to higher compensation expense, including the

    impact of restricted stock awards granted in January 2022.




Segment Results

BBX Capital reports the results of its business activities through the following reportable segments: BBX Capital Real Estate, BBX Sweet Holdings, and Renin.

Information regarding income (loss) before income taxes by reportable segment is set forth in the table below (in thousands):

                                                      For the Years Ended December 31,
                                                   2022              2021            2020
BBX Capital Real Estate                        $     75,231            58,311           9,988
BBX Sweet Holdings                                      189            15,784         (47,473 )
Renin                                               (15,444 )            (986 )        (3,572 )
Other                                                 1,015             1,390          (2,915 )
Reconciling items and eliminations                  (18,200 )         (10,258 )       (14,366 )
Income (loss) before income taxes              $     42,791            64,241         (58,338 )
(Provision) benefit for income taxes                (15,149 )         (17,175 )        11,248
Net income (loss)                                    27,642            47,066         (47,090 )
Net loss (income) attributable to
noncontrolling interests                                378              (155 )         4,803
Net income (loss) attributable to
shareholders                                   $     28,020            46,911         (42,287 )




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BBX Capital Real Estate Reportable Segment

Segment Description



BBX Capital Real Estate is engaged in the acquisition, development,
construction, ownership, financing, and management of real estate and
investments in real estate joint ventures, including investments in multifamily
rental apartment communities, single-family master-planned for sale housing
communities, and commercial properties located primarily in Florida. Since
November 2018, BBX Capital Real Estate has owned a 50% equity interest in the
Altman Companies, a developer and manager of multifamily rental apartment
communities, and in January 2023, BBX Capital Real Estate acquired the remaining
equity interests in the Altman Companies. In addition, BBXRE manages the legacy
assets acquired in connection with the Company's sale of BankAtlantic in 2012,
including portfolios of loans receivable, real estate properties, and judgments
against past borrowers.



In an effort to diversify its portfolio of real estate developments, BBXRE is
also currently pursuing investment opportunities in the development of warehouse
and logistics facilities and has expanded its operating platform to include a
logistics real estate division. Further, as market conditions permit, the Altman
Companies may also evaluate potential opportunities to develop multifamily
apartment communities in new geographical areas, as well as multifamily
apartment communities that include affordable housing.



Overview



During 2021 and into the first half of 2022, BBXRE's operations benefited from
an increase in demand for single-family and multifamily apartment housing in
many of the markets in Florida in which BBXRE operates, as sales at BBXRE's
single-family home developments and leasing at its multifamily apartment
developments sponsored by the Altman Companies were exceeding prior
expectations. Further, BBXRE had benefited from (i) investor demand for the
acquisition of stabilized multifamily apartment communities, as evidenced by the
sale of three communities sponsored by the Altman Companies in 2021 and three
additional communities sponsored by the Altman Companies in 2022, and (ii) the
availability of debt and equity capital for financing new multifamily apartment
developments, as evidenced by the Altman Companies commencing the development of
three multifamily apartment communities in 2021 and two multifamily apartment
communities in 2022.



However, more recently, rising interest rates have increased the cost of the
Company's outstanding indebtedness and any new financing and have also had an
adverse impact on applications for mortgage financing and home sales, the
availability of financing, and the anticipated profitability of development
projects, as (i) a majority of development costs are financed with third party
debt and (ii) capitalization rates related to multifamily apartment communities
are generally impacted by interest rates. BBXRE has also recently observed a
decline in the number of potential investors interested in pursuing equity or
debt financing for new multifamily apartment developments and the acquisition of
stabilized multifamily apartment communities, which BBXRE believes is also a
result of rising interest rates and an overall decline in economic and market
conditions. In addition, there has also been a significant increase in land,
commodity, and labor prices, which has resulted in higher development and
construction costs, and disruptions in supply chains for certain commodities and
equipment, which has resulted in ongoing supply shortages of building materials,
equipment, and appliances. These factors have negatively impacted (i) the timing
of projects currently under construction and (ii) the commencement of new
development opportunities and the anticipated profitability of such developments
and may have a material adverse impact on BBXRE's results of operations, cash
flows, and financial condition in future periods, particularly if debt and
equity financing is not available for new projects or are only available on less
attractive terms and (iii) the values of multifamily apartment communities are
adversely impacted by an increase in capitalization rates or a decline in the
number of potential purchasers.



While BBXRE's operating results in 2021 and 2022 significantly benefited from
demand for single-family and multifamily housing, BBXRE currently expects a
significant decline in revenues and net income over the next several years as
compared to 2021 and 2022 based on its current pipeline of investments, which
reflects, among other things, (i) the accelerated monetization of certain
investments from future years into 2021 and 2022 as a result of market
conditions, (ii) the temporary delay of the commencement of new development
projects in 2020 due to the COVID-19 pandemic, which is resulting in a decline
in expected monetization of investments in the near future, and (iii) more
recently, a decrease in the number of potential development opportunities which
meet its investment criteria, which is expected to result in a decline in fee
income recognized by the Altman Companies from new development projects. As a
result, BBXRE continues to remain focused on the sourcing and deployment of
capital in investments in new development opportunities where supported by
market conditions, including (i) the expansion of its investments in multifamily
rental apartment communities through the Altman Companies and (ii) investing in
the development of warehouse and logistics facilities through its recently
formed logistics real estate division, with the ultimate goal of building
long-term shareholder value and a diversified portfolio of profitable real
estate investments that generate recurring earnings and cash flows in future
periods. However, due to the expected life cycle of these developments, which
generally results in the monetization of an investment approximately three years
following the commencement of the development, BBXRE does not expect that its
operating results will significantly benefit from these efforts in the near
term. Further, rising interest rates, increases in development costs, and a
decline in economic and market conditions have more recently adversely impacted
the costs and availability of debt and equity capital and reduced the number of
development projects meeting its investment criteria, and such conditions are
expected to adversely impact BBXRE's plans to deploy capital in investments in
new development opportunities.

The Altman Companies and Related Investments

As of December 31, 2022, BBX Capital Real Estate owned a 50% equity interest in
the Altman Companies, a joint venture between BBXRE and Joel Altman engaged in
the development, construction, and management of multifamily apartment
communities, and as further described below, in January 2023, BBX Capital Real
Estate acquired the remaining equity interests in the Altman Companies.









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BBXRE's Ownership in the Altman Companies and Acquisition of Additional Equity Interests in 2023

In November 2018, BBX Capital Real Estate acquired a 50% equity interest in the
Altman Companies for cash consideration of $14.6 million, including $2.3 million
in transaction costs, with Mr. Altman retaining a 50% equity interest. While the
Altman Companies was a joint venture between BBXRE and Mr. Altman, the parties
shared decision-making authority for all significant operating and financing
decisions. To the extent that the parties could not reach consensus on a matter,
the operating agreement generally provided that a third party would resolve such
matter; however, for certain decisions, the operating agreement provided that
the venture could not proceed with such matters without approval from both
parties.



Pursuant to the operating agreement of the Altman Companies, BBXRE also agreed
to acquire an additional 40% equity interest in the Altman Companies from Mr.
Altman in January 2023 for a purchase price of $9.4 million, subject to certain
adjustments (including reimbursements for predevelopment expenditures incurred
at the time of the acquisition), at which time BBXRE would also acquire control
and decision-making authority for all significant operating and financing
decisions related to the Altman Companies as of and subsequent to the
acquisition. Further, Mr. Altman also had the right, at his option or in other
predefined circumstances, to require BBXRE to purchase his remaining 10% equity
interest in the Altman Companies for $2.4 million, at which time Mr. Altman
would no longer serve as an employee of the Altman Companies and no longer have
an equity interest in the Altman Companies. However, irrespective of BBXRE's
acquisition of additional equity interests in the Altman Companies, Mr. Altman
is entitled to retain his membership interests, including his decision-making
rights, in the managing member of all development joint ventures that were
originated prior to BBXRE's acquisition of such equity interests in the Altman
Companies from Mr. Altman.



On January 31, 2023 (the "Acquisition Date"), BBXRE closed on the acquisition of
the additional 40% equity interests in the Altman Companies for $8.1 million,
reflecting the base purchase price of $9.4 million, an additional $0.1 million
of reimbursements for predevelopment expenditures incurred at the time of the
acquisition, and a downward adjustment of $1.4 million to reflect an estimated
working capital deficit calculated pursuant to the terms of the operating
agreement. Pursuant to the terms of the operating agreement, the final working
capital adjustment amount will be determined by BBXRE and Mr. Altman following
the closing and may result in the payment of additional consideration to Mr.
Altman or a refund to BBXRE.



In connection with the acquisition of the 40% interest from Mr. Altman, BBXRE
also acquired the remaining 10% equity interest owned by Mr. Altman. Pursuant to
the terms of the modified arrangement for the acquisition of the remaining 10%
equity interest, the parties agreed that Mr. Altman will remain employed by the
Altman Companies and that the remaining $2.4 million payment for the interest
will be deferred until the earlier of (i) the termination of Mr. Altman's
employment from the Altman Companies or (ii) November 30, 2028 (the "Final
Payment Date"). In addition, the parties agreed to the following terms related
to new development projects commencing subsequent to the Acquisition Date :

? With respect to certain proposed development projects in predevelopment, Mr.

Altman will be entitled to invest in the managing member of any joint venture

formed to invest in such projects as if his ownership percentage in the

Altman Companies was still 10% if the projects commence prior to the Final

    Payment Date.

? With respect to certain proposed development projects that were determined to

be unlikely to proceed and for which Mr. Altman did not receive reimbursement

for his share of predevelopment expenditures at closing, BBXRE agreed to

reimburse Mr. Altman for his share of predevelopment expenditures if such

projects ultimately proceed at a later date prior to the Final Payment Date.

Further, if the projects commence prior to the Final Payment Date, Mr. Altman

will also be entitled to invest in the managing member of any joint venture

formed to invest in such projects as if his ownership percentage in the Altman

    Companies was still 10%.

? With respect to all other projects that commence prior to the Final Payment

Date, Mr. Altman will be required to invest in the managing member of any

joint venture formed to invest in such projects as if his relative ownership

percentage in the Altman Companies was 10%. However, in such case, his

investment in the ventures will be entitled to profits similar to those earned

by non-managing members rather than the profits to which BBXRE will be

entitled as the managing member. If Mr. Altman does not invest in the

additional joint ventures, BBXRE will be entitled to offset his required

capital contribution against the deferred $2.4 million payable to Mr. Altman.

As a result of the transaction, BBXRE is now entitled to nominate all members of
the executive committee responsible for the management of the Altman Companies
(although BBXRE has continued to nominate Mr. Altman as a member of the
committee) and is deemed to have acquired control and decision-making authority
for all significant operating and financing decisions related to the Altman
Companies. Further, BBXRE will have decision-making authority for all
significant operating and financing decisions for any development joint venture
that is sponsored and formed by the Altman Companies subsequent to the
Acquisition Date. However, as discussed above, Mr. Altman has retained his
membership interests, including his decision-making rights, in the managing
member of all development joint ventures that were originated prior to BBXRE's
acquisition of the remaining equity interests in the Altman Companies from Mr.
Altman.

Accounting for BBXRE's Investment in the Altman Companies and Related Investments

Through the Acquisition Date, the Company accounted for its investment in the
Altman Companies under the equity method of accounting, as BBXRE and Mr. Altman
jointly managed the Altman Companies and shared decision-making authority for
all significant operating and financing decisions through such date. Further,
the Company has accounted for its investments in the managing member of
development joint ventures that were originated prior to the Acquisition Date
under the equity method of accounting, as BBXRE and Mr. Altman similarly shared
decision-making authority for all significant operating and financing decisions
related to the managing member of such joint ventures.



As a result of BBXRE's acquisition of control and decision-making authority over
the Altman Companies, the Company will now consolidate the Altman Companies in
its financial statements as of the Acquisition Date using the acquisition method
of accounting, which requires that the assets acquired and liabilities assumed
associated with an acquiree be recognized at their fair values at the
acquisition date. As a result, during the three months ended March 31, 2023, the
Company will remeasure the carrying value of its current equity interests in the
Altman Companies at fair value as of the Acquisition Date, with any
resulting remeasurement adjustment recognized in the Company's statement of
operations, and the Company expects to recognize goodwill based on the
difference between (i) the fair values of the identifiable assets and
liabilities of the Altman Companies at the Acquisition Date and (ii) the
aggregate of the consideration transferred (measured in accordance with the
acquisition method of accounting) and the fair values of the Company's current
equity interest and any noncontrolling interests in the Altman Companies at the
acquisition date.



As a result of the acquisition, the Company expects that it will also
consolidate the managing member of any new development joint ventures that are
sponsored and formed by the Altman Companies commencing as of and subsequent to
the Acquisition Date. Further, while Joel Altman will generally retain his
decision-making rights in the managing member of development joint ventures that
were originated prior to the Acquisition Date, the Company is continuing to
evaluate its accounting for its investment in such joint ventures as of and
subsequent to the Acquisition Date under the applicable accounting guidance.



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Developments Monetized in 2022

During the year ended December 31, 2022, joint ventures sponsored by the Altman
Companies sold: (i) Altis Little Havana, a 224-unit multifamily apartment
community located in Miami, Florida, (ii) Altis Miramar, a 320-unit multifamily
apartment community located in Miramar, Florida, and (iii) Altra Miramar, a
330-unit multifamily apartment community adjacent to Altis Miramar. As a result
of these sales, BBXRE received total cash distributions of $25.8 million and
recognized total equity earnings of $22.6 million from its investments in the
respective joint ventures.



New Developments



During the year ended December 31, 2022, joint ventures sponsored by the Altman
Companies closed on development financing and commenced the development of (i)
Altis Santa Barbara, a planned 242-unit multifamily apartment community in
Naples, Florida and (ii) Altra Kendall, a planned 342-unit multifamily apartment
community in Kendall, Florida.



In 2019, BBXRE and Joel Altman had previously invested in the Altis Lake Willis
Vineland joint venture, which was sponsored by the Altman Companies to acquire
land, obtain entitlements, and fund predevelopment costs for the development of
a multifamily apartment community in Orlando, Florida. In 2021, the joint
venture decided to develop the project in two phases. Accordingly, in September
2021, the Altis Lake Willis Phase 1 joint venture was formed to develop the
first phase of the project, which is expected to be comprised of a 329-unit
multifamily apartment community, and the joint venture closed on its development
financing and commenced development of the community. In connection with the
closing, BBXRE and Joel Altman acquired membership interests in the managing
member of the Altis Lake Willis Phase 1 joint venture and retained their
respective ownership interests in the land and predevelopment costs related to
the anticipated second phase of the project through the existing Altis Lake
Willis Vineland joint venture. In September 2022, the Altis Lake Willis Phase 2
joint venture was formed to develop the second phase of the project, which is
expected to be comprised of a 230-unit multifamily apartment community, and the
remaining land held by the Altis Lake Willis Vineland joint venture was
transferred to the Altis Lake Willis Phase 2 joint venture in exchange for cash.
In connection with the transfer of the land, BBXRE and Joel Altman also acquired
membership interests in the managing member of the Altis Lake Willis Phase 2
joint venture. As a result of the transaction, BBXRE received a cash
distribution of approximately $2.3 million from the Altis Lake Willis Vineland
joint venture and recognized approximately $0.4 million of equity earnings from
its investment in the venture during the year ended December 31, 2022. As of
December 31, 2022, construction activities related to the development of Altis
Lake Willis Phase 2 had commenced, and the joint venture was continuing to seek
debt financing for the project.



Business Update



During 2021 and into the first half of 2022, developments sponsored by the
Altman Companies benefited from an increase in demand for multifamily apartment
housing in many of the markets in Florida in which the Altman Companies
operates, as the volume of new leases and rental rates at its completed
developments were generally exceeding prior expectations. Further, as evidenced
by the sales of Altis Little Havana in June 2022 and Altis Miramar and Altra
Miramar in July 2022, investor demand for the acquisition of stabilized
multifamily apartment communities continued to be strong. However, more recently
there has been observed (i) a deceleration in the growth of rental rates at the
Altman Companies developments, as well a decline in rates in certain markets,
(ii) a slowdown in investor demand for multifamily apartment communities and
indications of an increase in capitalization rates, both of which are expected
to have a negative impact on the value of multifamily apartment communities,
(iii) a relative decline in the availability of debt and equity capital for new
multifamily apartment developments, and (iv) a decrease in the number of
potential development projects which meet applicable investment criteria. These
conditions are believed to be the result of increases in interest rates and a
decline in economic and market conditions.



With respect to its communities where construction commenced in 2021 and 2022,
while the Altman Companies' development budgets for these projects contemplated
increases in commodity and labor prices, the Altman Companies has continued to
experience (i) significant volatility in development costs, including higher
than anticipated interest costs related to debt financing and unanticipated
increases in commodities costs, and (ii) delays in the timing of the completion
of projects. While the Altman Companies previously anticipated that the impact
of higher development costs on the profits expected to be earned on these
developments would be offset to some extent by various factors, including higher
rental rates currently resulting from inflationary factors and demand for
multifamily housing, the Altman Companies now believes that, in light of a
decrease in investor demand and an increase in capitalization rates, which would
negatively impact the values at which these communities could be sold upon
stabilization and the timing of such sales, there is significant risk that these
projects will be less profitable than previously expected or may not be
profitable at all.



During 2021 and 2022, the Altman Companies also identified various new
opportunities for developments but many of these development projects no longer
meet the Altman Companies' investment criteria due to a combination of (i)
significant increases in development costs, including the cost of land,
commodities, labor, and property insurance, (ii) supply chain disruptions and
material shortages, (iii) the impact of higher interest rates and insurance
costs on development costs and the estimated values at which multifamily
apartment communities can be sold, and (iv) the increased uncertainty related to
whether growth in rental rates will be able to offset more recent increases in
development costs. In addition, the Altman Companies has observed a relative
decline in the availability, as well as increases in the cost, of debt and
equity capital for new development opportunities, and uncertainty in the overall
economy and compression in the profits expected to be earned from new
developments has increased the risk of the Altman Companies being unable to
identify equity and/or debt financing on acceptable terms, or at all. As a
result of these factors, during the year ended December 31, 2022, the Altman
Companies made a decision not to move forward with these prospective development
opportunities and recognized losses related to predevelopment expenditures for
such developments. Further, the Altman Companies anticipates that its operating
results  will no longer include the previously anticipated development, general
contractor, and management fees related to such projects.



Other Matters



In certain circumstances, the Altman Companies may acquire the 40% membership
interests in AGC that are not owned by the Altman Companies for a purchase price
based on formulas set forth in the operating agreement of AGC. Following the
acquisition of Mr. Altman's equity interests in the Altman Companies in January
2023, BBXRE currently expects that it will exercise its right to acquire the
remaining 40% membership interests in AGC in 2023. Due to the formula applicable
to the option pursuant to which BBXRE is permitted to acquire such interests,
which is primarily calculated based on AGC's working capital balance and a
percentage of expected profits from current construction projects and is not
calculated based on the fair value of such interests, BBXRE does not expect to
pay a significant amount of cash upon the closing of the acquisition of such
interests. However, BBXRE would assume responsibility for any working capital
deficits related to AGC at the time of closing and may be obligated to pay a
percentage of profits from AGC, if any, to the seller over time.



In March 2023, the Altman Companies amended and restated the operating agreement
of AMC to admit an unaffiliated property management company as a joint venture
partner. The Altman Companies is continuing to serve as the managing member of
AMC, with any major decisions requiring the approval of both parties. Once the
parties have received any necessary consents related to the formation of the
joint ventures as required by various stakeholders, including certain lenders,
equity investors, and regulatory agencies with jurisdiction, the unaffiliated
property management company will serve as the managing member of AMC, with any
major decisions continuing to require the approval of both parties. Under the
terms of the operating agreement, the parties will each be entitled to receive
distributions of available cash of the joint venture based on a proscribed
formula within the operating agreement, with the parties generally each
receiving 50% of distributable cash after the unaffiliated property management
company has received its initial contribution to AMC and the parties have
received a return of any additional capital contributions subsequent to the
formation of the joint venture. Further, pursuant to the terms of the agreement,
each party has the right to terminate the joint venture arrangement at any time,
with such termination resulting in the unaffiliated property management company
transferring its ownership interests in AMC back to the Altman Companies.
However, if the Altman Companies exercises this right prior to the first
anniversary of the formation of the joint venture, the Altman Companies is
required to pay a penalty up to a maximum amount of $0.2 million.















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Risks Related to Current Economic Conditions

Economic and market conditions are highly uncertain as a result of various
factors, including inflationary pressures and expected further increases in
interest rates. An economic recession, or significantly slower growth resulting
from these factors could adversely impact rental rates, occupancy levels, and
rental receipts (including an increase in tenant delinquencies and/or requests
for rent abatements), and these effects would impact (i) the amount of rental
revenues generated from the multifamily apartment communities sponsored and
managed by the Altman Companies, (ii) the extent of management fees earned by
the Altman Companies, and (iii) the ability of the related joint ventures to
stabilize and successfully sell such communities. Furthermore, a decline in
rental revenues at developments sponsored by the Altman Companies could require
it, as the sponsor and managing member, to fund operating shortfalls in certain
circumstances. In addition, as discussed above, the increases in costs of
developing and operating multifamily apartment communities, including, but not
limited to, increases in commodity prices, labor prices, and property insurance
costs, could also have an adverse impact on market values and the Altman
Companies' operating results. If there is a significant adverse impact on real
estate values as a result of increased interest rates, lower rental revenues,
higher capitalization rates, or otherwise, the joint ventures sponsored by the
Altman Companies may be unable to sell their respective multifamily apartment
developments within the time frames previously anticipated and/or for the
previously forecasted sales prices, if at all, which may impact the profits
expected to be earned by BBXRE from its investment in the managing member of
such projects and the ability of the joint ventures to repay or refinance
construction loans on such projects and could result in the recognition of
impairment losses related to BBXRE's investment in such projects. Furthermore,
the Altman Companies may be unable to close on the equity and/or debt financing
necessary to commence the construction of new projects, or may determine to not
pursue certain development opportunities which no longer meet its investment
criteria, which could result in, among other things, (i) increased operating
losses at the Altman Companies due to a decline in development, general
contractor, and management fees, (ii) the recognition of impairment losses by
BBXRE and/or the Altman Companies related to their current investments,
including predevelopment expenditures related to prospective development
opportunities that are abandoned, and (iii) the recognition of impairment losses
related to BBXRE's overall investment in the Altman Companies, as the
profitability and value of the Altman Companies depends on its ability to source
new development opportunities.

Beacon Lake Master Planned Development

BBXRE is the master developer of the Beacon Lake Community, a master planned
community located in St. Johns County, Florida that is being developed in four
phases and expected to be comprised of 1,476 single-family homes and townhomes.
BBXRE is primarily developing the land and common areas and selling finished
lots to third-party homebuilders. Other than in the case of the lots comprising
Phase 4, which were sold to a homebuilder as undeveloped lots, the agreements
pursuant to which BBXRE is selling finished lots to homebuilders generally
provide for a base purchase price that is paid to BBXRE upon the sale of the
developed lots to the homebuilders and a contingent purchase price that is
calculated as a percentage of the proceeds that the homebuilders receive from
the sale of the completed homes. While an estimated amount of the contingent
purchase price is recognized in BBXRE's revenues upon the sale of the lots to
the homebuilders, the contingent purchase price is paid to BBXRE upon the
closing of such home sales by homebuilders.



BBXRE has substantially completed the development of the lots comprising Phases
1 through 3 of the Beacon Lake Community and previously sold the 299 undeveloped
lots comprising Phase 4 in a bulk lot sale to a single homebuilder in 2021.
Further, as of December 31, 2022, BBXRE has sold all but 85 lots in the Beacon
Lake Community and is under contract to sell the remaining 85 lots to
homebuilders. Accordingly, other than closing on the sale of the remaining lots
in Phase 3, BBXRE has substantially completed its primary activities as the
master developer of the Beacon Lake Community. However, as discussed above,
BBXRE expects to continue to collect contingent purchase price from homebuilders
upon the sale of homes by the homebuilders, and as of December 31, 2022, BBXRE
had recognized contingent purchase price receivables totaling $16.9 million
related to the sale of lots in the Beacon Lake Community.



During the year ended December 31, 2022, BBXRE sold 146 single-family lots and
32 townhome lots in the Beacon Lake Community, as compared to the sale of 299
undeveloped lots comprising Phase 4, 291 single-family lots, and 94 townhome
lots during the year ended December 31, 2021. The decrease in the lots sold in
2022 as compared to 2021 reflects the significant increase in demand for
single-family housing in Florida following the COVID-19 pandemic, which
ultimately resulted in higher than anticipated sales in 2021 and the
acceleration of the completion of the development.



BBXRE has substantially completed the development of lots at the Beacon Lake
Community, and its development costs were not materially impacted by recent
increases in commodity and labor prices. However, BBXRE expects that
homebuilders are experiencing increases in costs to construct homes on the
developed lots throughout the Beacon Lake Community. Further, while homebuilders
have continued to sell homes in the Beacon Lake Community, BBXRE has recently
observed a deceleration in the number of prospective homebuyers and home sales
as compared to 2021 and early 2022, which BBXRE believes is attributable to the
impact of an increase in interest rates on mortgage loans and uncertainty
related to a potential recessionary economic environment on demand for
single-family homes. In spite of these factors, BBXRE currently believes that
homebuilders are likely to continue to meet their obligations to acquire the
remaining lots in the community from BBXRE pursuant to the existing agreements
between BBXRE and the homebuilders, as the impact of the increase in
construction costs on the profitability of home sales has been offset to some
extent by an increase in prices for single-family homes; however, there is no
assurance that homebuilders will not default on their obligations to acquire the
remaining lots in the community. Further, in many cases, BBXRE's estimate of
contingent purchase price on lots sold to homebuilders are based on executed
contracts between the homebuilders and homebuyers, and BBXRE currently believes
that it is probable that it will collect its estimated contingent purchase price
receivables. However, if market factors result in a significant decline in
demand and selling prices for single-family homes and/or a significant number of
prospective home buyers forfeiting deposits on executed contracts to purchase
homes in the community, BBXRE's expected contingent purchase price due from
homebuilders upon the sale of homes in the community may be negatively impacted
and could result in the reversal of previously recognized revenues related to
contingent purchase price receivables.







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Single -Family Development Joint Ventures

As of December 31, 2022, BBXRE had previously invested approximately
$8.1 million in a joint venture with CC Homes to develop Marbella, a residential
community comprised of 158 single-family homes in Miramar, Florida. During the
year ended December 31, 2022, the joint venture closed on the sale of
126 single-family homes, and BBXRE recognized $12.6 million of equity earnings
and received $12.5 million of distributions from the venture. As of December 31,
2022, the joint venture had closed on the sale of all 158 single-family homes
comprising Marbella.



In June 2019, BBXRE invested $4.2 million in the Sky Cove joint venture, which
was formed to develop Sky Cove at Westlake, a residential community comprised of
204 single-family homes in Loxahatchee, Florida. During the year ended December
31, 2022, the joint venture closed on the sale of 39 single-family homes, and
BBXRE recognized $0.5 million of equity earnings and received $2.1 million of
distributions from the joint venture. As of December 31, 2022, the joint venture
had closed on the sale of all 204 single-family homes comprising Sky Cove.



In February 2021, BBXRE invested $4.9 million in the Sky Cove South joint
venture, which was formed to develop Sky Cove South at Westlake, a residential
community that will be adjacent to Sky Cove at Westlake and is expected to be
comprised of 197 single-family homes. During the year ended December 31, 2022,
the joint venture closed on the sale of 80 single-family homes, and BBXRE
recognized $0.6 million of equity earnings and received $2.1 million of
distributions from the venture. As of December 31, 2022, the joint venture had
executed contracts to sell 172 homes in the community and had closed on the
sale of 80 homes.



Bayview Joint Venture



In 2014, BBXRE invested in a joint venture (the "Bayview joint venture") with an
affiliate of Procacci Development Corporation ("Procacci"). At the inception of
the venture, BBXRE and Procacci each contributed $1.8 million to the venture in
exchange for a 50% equity interest, and the joint venture acquired approximately
three acres of real estate in Fort Lauderdale, Florida for $8.0 million. The
property was subject to a mortgage loan which had an outstanding balance of $5.0
million, and in connection with BBXRE's investment in the joint venture, the
Company also guaranteed 50% of the outstanding balance of the mortgage loan.



In June 2022, BBXRE sold its equity interest in the Bayview joint venture to
Procacci. As a result of the transaction, BBXRE received net cash proceeds of
approximately $8.8 million and recognized a net gain from the sale of its
investment in the venture of approximately $7.3 million, which is included in
equity in net earnings of unconsolidated real estate joint ventures in the
Company's condensed consolidated statements of operations for the year ended
December 31, 2022. In connection with the sale, the Company and BBXRE obtained a
release from the lender for any liability to the lender under the loan
documents, including any obligation related to the Company's guaranty on the
outstanding loan balance.



Other Real Estate Activities



During the years ended December 31, 2022 and 2021, BBXRE sold various real
estate assets in its legacy asset portfolio, and as a result of such sales, the
Company recognized total net gains of $24.3 million and $0.6 million,
respectively, and received aggregate net cash proceeds of $27.3 million and
$2.4 million, respectively. Included in the net gains on sales of real estate
for the year ended December 31, 2022 was a gain of $23.0 million recognized upon
the sale of 119 acres of vacant land in St. Lucie County, Florida in December
2022.



Results of Operations

Information regarding the results of operations for BBX Capital Real Estate is set forth below (dollars in thousands):

                                                                                   Change        Change
                                       For the Years Ended December 31,            2022 vs       2021 vs
                                     2022              2021           2020          2021          2020
Sales of real estate inventory    $    27,794            65,479        20,363       (37,685 )      45,116
Interest income                         3,617             2,048         1,240         1,569           808
Net gains on sales of real
estate assets                          24,289               643           255        23,646           388
Other                                   1,835             1,504         1,454           331            50
Total revenues                    $    57,535            69,674        23,312       (12,139 )      46,362
Cost of real estate inventory
sold                                   11,463            29,690        13,171       (18,227 )      16,519
Recoveries from loan losses,
net                                    (4,835 )          (7,774 )      (8,876 )       2,939         1,102
Impairment losses                         311                 -         2,742           311        (2,742 )
Selling, general and
administrative expenses                13,772             7,587         6,758         6,185           829
Total costs and expenses               20,711            29,503        13,795        (8,792 )      15,708
Operating profits                      36,824            40,171         9,517        (3,347 )      30,654
Equity in net earnings of
unconsolidated real estate
joint ventures                         38,414            18,154           465        20,260        17,689
Other (expense) income                     (7 )             (14 )           6             7           (20 )
Income before income taxes        $    75,231            58,311         9,988        16,920        48,323




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BBX Capital Real Estate's income before income taxes for the year ended December
31, 2022 compared to the 2021 period increased by $16.9 million primarily due to
the following:

? An increase in net gains on the sales of real estate assets primarily

attributable to BBXRE's sale of 119 acres of vacant land in St. Lucie County,

Florida in December 2022, which resulted in the recognition of a net gain on

sale of $23.0 million in 2022;

? A net increase in equity in net earnings of unconsolidated joint ventures

primarily due to (i) the Altis Little Havana joint venture's sale of its

multifamily apartment community in 2022, which resulted in the recognition of

$8.7 million of equity earnings from BBXRE's investment in the venture, (ii)

the Altis Miramar East/West joint venture's sale of its multifamily apartment

communities in 2022, which resulted in the recognition of $14.0 million of

equity earnings from BBXRE's investment in the venture in 2022, (iii) BBXRE's

sale of its equity interest in the Bayview joint venture in 2022, which

resulted in the recognition of a gain of $7.3 million upon the sale in 2022,

and (iv) the Marbella joint venture's sale of single-family homes in 2022,

which resulted in the recognition of $12.6 million of equity earnings from

BBXRE's investment in the venture in 2022, partially offset by (i) the Altis

Promenade joint venture's sale of its multifamily apartment community in 2021,

which resulted in the recognition of $5.2 million of equity earnings from

BBXRE's investment in the venture in 2021, (ii) the Altis Grand at the

Preserve joint venture's sale of its multifamily apartment community in 2021,

which resulted in the recognition of $5.0 million of equity earnings from

BBXRE's investment in the venture in 2021, (iii) the Altis Grand Central

joint venture's recapitalization of its ownership of its multifamily apartment

community in 2021, which resulted in the recognition of $6.2 million of equity

earnings from BBXRE's investment in the venture in 2021; and (iv) BBXRE's

share of losses recognized by the Altman Companies in 2022 primarily related

to the impairment of predevelopment expenses for prospective development

projects that are no longer expected to commence;

? An increase in interest income as a result of (i) higher interest income from

cash, cash equivalents, and investment securities as a result of higher

balances and an overall increase in interest rates and (ii) higher interest

income from loans from a subsidiary of BBXRE to IT'SUGAR; partially offset by

? A decrease in net profits from the sale of lots to homebuilders at the Beacon

Lake Community development, as BBXRE sold 146 single-family lots and 32

townhome lots in 2022 as compared to the sale of the 299 undeveloped lots

comprising Phase 4, 291 single-family lots, and 94 townhome lots during

the 2021 period;

? Lower recoveries from loan losses in 2022 as compared to the 2021 period; and

? An increase in selling, general, and administrative expenses primarily due to

(i) new hires, which reflects the establishment of BBXRE's logistics real

estate division, (ii) increased incentive compensation, which includes the

    impact of compensation related to sales activity in 2022, and (iii) the
    recognition of severance expense.

BBX Sweet Holdings Reportable Segment

Segment Description



BBX Sweet Holdings is engaged in the ownership and management of operating
businesses in the confectionery industry, including (i) IT'SUGAR, a specialty
candy retailer whose products include bulk candy, candy in giant packaging, and
licensed and novelty items and which operates in retail locations that include a
mix of high-traffic resort and entertainment, lifestyle, mall/outlet, and urban
locations throughout the United States and one location in Canada, and (ii) Las
Olas Confections and Snacks, a manufacturer and wholesaler of chocolate and
other confectionery products which also operates several Hoffman's Chocolates
retail locations in South Florida.



Overview

IT'SUGAR - Emergence from Bankruptcy in 2021

BBX Sweet Holdings owns over 90% of the equity interests in IT'SUGAR. Prior to
September 22, 2020, the Company consolidated the financial statements of
IT'SUGAR and its subsidiaries as a result of its over 90% ownership of IT'SUGAR.
As a result of the impact of the COVID-19 pandemic on its operations, on
September 22, 2020, IT'SUGAR and its subsidiaries filed voluntary petitions to
reorganize under Chapter 11 of Title 11 of the U.S. Code (the "Bankruptcy Code")
in the U.S. Bankruptcy Court for the Southern District of Florida (the
"Bankruptcy Court") (the cases commenced by such filings, the "Bankruptcy
Cases"), and as a result of the filings and the uncertainties surrounding the
nature, timing, and specifics of the bankruptcy proceedings, the Company
deconsolidated IT'SUGAR on September 22, 2020. On June 16, 2021, the Bankruptcy
Court confirmed IT'SUGAR's plan of reorganization, and the plan became effective
on June 17, 2021 (the "Effective Date"). On the Effective Date, IT'SUGAR entered
into a secured exit credit facility with a wholly-owned subsidiary of BBXRE (the
"Exit Facility") which provided for advances to IT'SUGAR of up to $13.0 million,
and BBXRE's wholly-owned subsidiary advanced $13.0 million to IT'SUGAR under the
Exit Facility, less the repayment of amounts under loans previously due from
IT'SUGAR to BBXRE's wholly-owned subsidiary (which were superseded and replaced
by the Exit Facility). Pursuant to the terms of the plan, BBX Sweet Holdings'
equity interests in IT'SUGAR were revested on the Effective Date, and all
organizational documents of IT'SUGAR were assumed, ratified, and reinstated. As
a result of the confirmation and effectiveness of the plan and the revesting of
its equity interests in IT'SUGAR, the Company was deemed to have reacquired a
controlling financial interest in IT'SUGAR and consolidated the results of
IT'SUGAR into its consolidated financial statements as of the Effective Date,
the date that the Company reacquired control of IT'SUGAR.



As a result of the reconsolidation of IT'SUGAR, BBX Sweet Holdings recognized a
gain on consolidation of $15.9 million during the year ended December 31, 2021,
which reflects the remeasurement of the carrying value of BBX Sweet Holdings'
equity interests in IT'SUGAR at fair value as of the Effective Date. Further, as
a result of the deconsolidation of IT'SUGAR on September 22, 2020 and subsequent
reconsolidation of IT'SUGAR on the Effective Date, IT'SUGAR's results of
operations are excluded from the Company's statements of operations and
comprehensive income for the period from September 22, 2020 through June 16,
2021.



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IT'SUGAR - Business Update

As of December 31, 2022, IT'SUGAR was operating approximately 100 retail locations across the United States, including 12 "pop-up" retail locations.

Since its emergence from the Bankruptcy Cases (during which it permanently
closed 17 retail locations, opened 10 "pop-up" retail locations in select U.S.
locations, and executed lease amendments with respect to 78 of its retail
locations), IT'SUGAR has been focused on leveraging its reputation as a
"retailtainment" experience for customers to expand and improve the quality of
its store portfolio through the following:

? Expanding on the recent success of its "candy department store" concept in

select high-traffic resort and entertainment locations across the United

States (as implemented in retail locations at American Dream in New Jersey and

the Ala Moana Center in Honolulu, Hawaii);

? Evaluating additional retail locations in targeted markets in which it

believes it can opportunistically capitalize on the availability of retail

space and a decline in rental rates for retail space generally in certain

markets;

? Improving the quality and remaining maturity of its store portfolio by (i)

extending the lease terms of its existing successful retail locations, (ii)

expanding the size of certain existing retail locations, and (iii) closing

retail locations where appropriate or where required by the terms of the

lease; and

? Opening "pop up" retail locations in select markets in order to test the

    markets for the viability of potential longer-term locations.

The following summarizes activity within IT'SUGAR's store portfolio of retail locations in 2022:

? IT'SUGAR opened (i) large format "pop-up" retail locations in Chicago,

Illinois, San Francisco, California, and Manhattan, New York, (ii) new retail

locations in Somerville, Massachusetts, Foxborough, Massachusetts, National

Harbor, Maryland, and Miami, Florida, (iii) its first international location

in West Edmonton, Canada, (iv) an Oreo Café in its "candy department store" at

Ala Moana Center in Honolulu, Hawaii, (v) an expansion of an existing retail

location in Coney Island, New York, (vi) an expanded relocation of a store at

an existing location in Branson, Missouri, (vii) a relocation of a store at an

existing location in Orlando, Florida, and (viii) "pop-up" retail locations in

Chicago, Illinois and Maui, Hawaii;

? IT'SUGAR executed lease agreements for various locations, including (i) two

"candy department stores" in high-traffic metropolitan areas, (ii) three new

retail locations, (iii) the relocation and expansion of an existing retail

location, and (iv) the extension of the lease term of two existing

"pop-up" retail locations; and

? IT'SUGAR closed six retail locations, including some of its "pop-up" retail

    locations.




During the course of the Bankruptcy Cases, IT'SUGAR opened various "pop-up"
retail locations in select locations across the United States. These locations
required initial capital investments that were generally significantly lower
than the investments required for IT'SUGAR's traditional retail locations and
were subject to lease agreements with terms ranging from 13-36 months and which
generally provided for the payment of rent based on a percentage of sales
generated at the applicable location. Although IT'SUGAR has been seeking to
extend the term of the leases for certain of these locations, some of the
landlords have indicated that they do not intend to extend the term of the
leases, and in some cases, IT'SUGAR has closed the locations. However, IT'SUGAR
is continuing to seek to open additional "pop-up" retail locations and
has expanded its "pop-up" retail location concept to include large format
locations that are similar in size to its "candy department stores." Although
these larger format "pop up" locations generally require initial capital
investments that are higher than its previous "pop-up" locations and are also
subject to leases that include fixed rental obligations as opposed to lease
payments based on a percentage of sales, IT'SUGAR believes that these locations
will generate higher sales that justify such investments. Further, as these
large format "pop-up" retail locations are generally in high-traffic
metropolitan locations of interest to IT'SUGAR, these locations will allow
IT'SUGAR to test the market and evaluate whether it should incur the capital
expenditures and lease obligations associated with longer-term retail locations
in these locations.



As noted above, IT'SUGAR executed lease amendments with respect to 78 retail
locations during the course of its bankruptcy. Although the specific terms of
the executed lease amendments vary, the amended leases generally provided for
the forgiveness of IT'SUGAR's pre-petition rent obligations, and many (but not
all) of the amended leases also provided for the payment of rent based on a
percentage of sales volumes (in lieu of previously scheduled fixed lease
payments), generally for a period of one to two years from the commencement of
the bankruptcy proceedings. Following such periods of time, the amended leases
generally required IT'SUGAR to resume the payment of previously scheduled fixed
lease payments going forward. As the temporary rent relief provided by many of
these amended leases expired in December 2021, IT'SUGAR experienced an increase
in its occupancy costs during the year ended December 31, 2022 as compared to
the same 2021 period as it recommenced the payment of previously scheduled fixed
lease payments. In addition, for certain retail locations, including four
locations that historically generated operating losses largely based on the
applicable fixed rental obligations prior to the amendments, the lease
amendments provide for the payment of rent based on a percentage of sales
volumes through the remainder of the lease term; however, in such cases, the
landlords generally have the right to terminate the lease agreements at any time
following notice periods ranging from 30 to 60 days.







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Although there is no assurance that it will be able to maintain or increase its
sales levels in future periods, IT'SUGAR's revenues in 2022 have significantly
increased as compared to 2021 and 2019 reflecting an increase in comparable
store sales, the revenues generated in new and expanded store locations, and
price increases implemented in response to higher inventory and freight costs,
as further discussed below. The following summarizes the increase in IT'SUGAR's
comparable store sales and total revenues during the periods indicated:

                                        Year 2021            Year 2022            Year 2022
                                     Compared to Year     Compared to Year     Compared to Year
                                           2019                 2019                 2021
Comparable Store Sales (1)                         14 %                 22 %                 11 %
Total Revenues                                     19 %                 40 %                 18 %

(1) Comparable store sales represent IT'SUGAR's sales at its retail locations

excluding both the impact of e-commerce sales and changes in its store

portfolio.

(2) Because IT'SUGAR's results for the six months ended June 30, 2021 and fiscal

2020 were significantly impacted by the COVID-19 pandemic, the Company has

included a comparison of its results for 2022 and 2021 to 2019 in order to

provide a comparison to periods that were not impacted by the COVID-19

      pandemic.




As a result of inflationary trends and disruptions in global supply chains,
IT'SUGAR has experienced an increase in the cost of inventory and freight.
Although it has experienced some compression in its selling margins, IT'SUGAR
has to date been able to mitigate the impact of increased costs to some extent
through increases in the prices of its products. However, to the extent that
costs continue to increase, there is no assurance that IT'SUGAR will be able to
continue to increase the prices of its products without significantly impacting
consumer demand and its sales volume. In addition to an increase in its product
costs, IT'SUGAR in the past experienced delays in its supply
chains which impacted the inventory levels at its retail locations. Following
difficulties in maintaining appropriate inventory levels during 2021, IT'SUGAR
increased the inventory levels at its retail locations in 2022 in an effort to
ensure that it can meet consumer demand. However, given economic uncertainty and
volatility, IT'SUGAR intends to closely manage its inventory levels in light of
a possible slowdown in consumer demand.

In addition to the above issues, IT'SUGAR has been impacted by staffing issues and has experienced an increase in payroll costs associated with hiring and maintaining staffing at its retail locations.

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Las Olas Confections and Snacks

During the year ended December 31, 2022, Las Olas Confections and Snacks'
revenues decreased by 4.9% as compared to its revenue during the same 2021
period. The decline in revenue for the year ended December 31, 2022 primarily
reflects lower wholesale revenues. Although Las Olas Confections and Snacks
experienced a decline in its revenues, its gross margin increased, as the
decline in revenues was partially attributable to its efforts to eliminate
existing products with low margins. Further, while Las Olas Confections and
Snacks has also been impacted by increased costs for raw materials, and supply
chain delays as well as higher wages, it has generally mitigated the impact of
these factors through increases in the prices of certain of its products and
improvements in labor efficiencies in its manufacturing facility.



During the year ended December 31, 2022, the Company sold Hoffman's Chocolates'
manufacturing facility in Greenacres, Florida. Substantially all of the products
previously manufactured at the Hoffman's Chocolates facility are now
manufactured at the existing Las Olas Confections and Snacks facility.



Results of Operations

Information regarding the results of operations for BBX Sweet Holdings is set forth below (dollars in thousands):

                                                                                 Change        Change
                                      For the Years Ended December 31,           2022 vs       2021 vs
                                     2022             2021          2020          2021          2020
Trade sales                       $   139,718          84,215        49,155        55,503        35,060
Cost of trade sales                   (83,307 )       (52,497 )     (41,482 )     (30,810 )     (11,015 )
Gross margin                           56,411          31,718         7,673        24,693        24,045
Interest income                             -              36            29           (36 )           7
Other revenue                               -               -           281             -          (281 )
Interest expense                       (1,015 )          (429 )        (193 )        (586 )        (236 )
Impairment losses                        (238 )           (38 )     (25,303 )        (200 )      25,265
Selling, general and
administrative expenses               (55,617 )       (31,524 )     (26,855 )     (24,093 )      (4,669 )
Total operating income (loss)            (459 )          (237 )     (44,368 )        (222 )      44,131
Other income                              718             131           221           587           (90 )
Loss on the deconsolidation of
IT'SUGAR, LLC                               -               -        (3,326 )           -         3,326
Gain on the consolidation of
IT'SUGAR, LLC                               -          15,890             -       (15,890 )      15,890
Foreign exchange loss                     (70 )             -             -           (70 )           -
Income (loss) before income
taxes                             $       189          15,784       (47,473 )     (15,595 )      63,257
Gross margin percentage                 40.37 %         37.66 %       15.61 %        2.71 %       22.05 %
SG&A as a percent of trade
sales                                   39.81 %         37.43 %       54.63 %        2.38 %      (17.20 )%
Expenditures for property and
equipment                         $    11,383           4,283         3,155         7,100         1,128
Depreciation and amortization     $     6,629           3,181         4,244         3,448        (1,063 )
Debt accretion and amortization   $        61              21           168            40          (147 )
Pre opening and closing
expenses                          $     1,021             158             8           863           150
ASC 842 straight line rent
adjustments                       $     1,764           1,502           542           262           960




BBX Sweet Holdings income before income taxes for the year ended December 31,
2022 compared to the same 2021 period decreased by $15.6 million primarily due
to the following:

? The recognition of a $15.9 million gain on the reconsolidation of IT'SUGAR in

the Company's financial statements in the 2021 period as a result of IT'SUGAR

emerging from bankruptcy and BBX Sweet Holdings reacquiring control of

IT'SUGAR in June 2021; partially offset by

? The recognition of a $0.9 million gain on the sale of property and equipment

    in the 2022 period associated with the Company's sale of the Hoffman's
    Chocolates manufacturing facility in Greenacres, Florida.




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Information regarding the results of operations for IT'SUGAR that were included
in the Company's consolidated financial statements is set forth below (dollars
in thousands):



                                                                                 Change         Change
                                      For the Years Ended December 31,           2022 vs        2021 vs
                                     2022             2021          2020          2021           2020
Trade sales                       $   119,302          62,161        31,794        57,141         30,367
Cost of trade sales                   (66,915 )       (34,423 )     (26,923 )     (32,492 )       (7,500 )
Gross margin                           52,387          27,738         4,871        24,649         22,867
Interest income                             -               -             8             -             (8 )
Interest expense                         (834 )          (314 )        (109 )        (520 )         (205 )
Impairment losses                        (238 )           (38 )     (24,948 )        (200 )       24,910
Selling, general and
administrative expenses               (48,732 )       (24,915 )     (21,121 )     (23,817 )       (3,794 )
Total operating income (losses)         2,583           2,471       (41,299 )         112         43,770
Other income                             (206 )            45           117          (251 )          (72 )
Foreign exchange loss                     (70 )             -             -           (70 )            -
Income (loss) before income
taxes                             $     2,307           2,516       (41,182 )        (209 )       43,698
Gross margin percentage                 43.91 %         44.62 %       15.32 %       (0.71 )%       29.30 %
SG&A as a percent of trade
sales                                   40.85 %         40.08 %       66.43 %        0.77 %       (26.35 )%




IT'SUGAR's operating results presented in the table above reflect IT'SUGAR's
operating results for the periods in which IT'SUGAR was consolidated in the
Company's consolidated financial statements. Accordingly, IT'SUGAR's operating
results for the year ended December 31, 2021 reflect their results for the
period from June 17, 2021, the date that the Company reconsolidated IT'SUGAR,
through December 31, 2021, while its operating results presented for the year
ended December 31, 2020 reflect their results for the period from January 1,
2020 through September 22, 2020, the date that the Company deconsolidated
IT'SUGAR.



The table above reflecting IT'SUGAR's standalone operating results excludes an
accrual related to a long-term incentive compensation plan implemented by BBX
Sweet Holdings for certain of IT'SUGAR's executives. The expense related to the
long-term incentive plan, which is reflected in BBX Sweet Holdings' consolidated
results, was $1.3 million and $0.7 million for the years ended December 31, 2022
and 2021, respectively.



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Renin Reportable Segment



Segment Description



Renin is engaged in the design, manufacture, and distribution of sliding doors,
door systems and hardware, and home décor products and operates through its
headquarters in Canada and manufacturing and distribution facilities in the
United States and Canada. In addition to its own manufacturing activities, Renin
sources various products and materials from China, Brazil, and certain other
countries. In October 2020, Renin acquired Colonial Elegance, a supplier and
distributor of building products that was headquartered in Montreal, Canada.
Colonial Elegance's products included barn doors, closet doors, and stair parts,
and its customers included big box retailers in the United States and Canada
which were complementary to and expanded Renin's existing customer base.

Renin's products are primarily sold through three channels in North America: retail, commercial, and direct installation in the greater Toronto area.

Overview



During the year ended December 31, 2022, Renin's sales decreased as compared to
the same period in 2021, and its retail channel comprised approximately 69% of
its gross sales for the 2022 period as compared to approximately 77% for the
same period in 2021. Although Renin's sales in 2022 benefited from price
increases to customers implemented in response to increased costs, as well as
sales of slow-moving inventory, the impact of these factors were offset
primarily by a decline in sales volume, which reflected (i) lower customer
demand in 2022, (ii) backordered inventory resulting from supply chain
disruptions, and (iii) one of Renin's major customers discontinuing its purchase
of certain products from Renin in late 2021. Further, in January 2022, Renin
experienced disruptions associated with inclement weather and restrictions on
business operations as a result of increased COVID-19 infections, which also
impacted its sales. With respect to the decline in customer demand, Renin
believes that the decline may be attributable to (i) the impact of price
increases, rising interest rates, and overall inflationary pressures on consumer
behavior, (ii) a shift in consumer spending away from home improvements as many
portions of the economy reopened following the COVID-19 pandemic, particularly
in the United States, and (iii) efforts by retailers to rationalize their
inventory levels in response to slowing consumer demand. Renin has continued to
observe a decline in customer demand in 2023, and its sales may be further
impacted in future periods if rising interest rates and a recessionary
environment further impacts consumer demand.



In addition to a decline in sales, Renin's gross margin percentage decreased
from 10.9% during the year ended December 31, 2021 to 3.3% during the year ended
December 31, 2022. Renin has continued to be negatively impacted by significant
increases in costs related to shipping and raw materials and delays in its
supply chains, which have adversely impacted (i) its product costs and gross
margin, (ii) its ability to fulfill customer orders, and (iii) its working
capital and cash flows due to increased inventory in transit, a prolonged period
between when it is required to pay its suppliers and it is paid by its
customers. While Renin has recently observed a decrease in spot rates for
shipping products from overseas, Renin's operating results have thus far not
meaningfully benefited from these decreases due to the timing of shipping
products from overseas and ultimately selling such products to its customers.
Further, costs to ship products from its domestic facilities to customers and
costs of raw materials remain highly volatile, which has continued to negatively
impact its gross margin. In addition, the overall decline in sales resulting
from lower customer demand has increased the impact of the manufacturing
overhead costs associated with its facilities on its operating results.



In an effort to mitigate the impact of certain of these factors, Renin has
sought to (i) negotiate increases in prices with its customers, (ii) maintain
adequate inventory levels in an effort to ensure that it can fulfill customer
orders, (iii) diversify its global supply chains, and (iv) transfer the assembly
of certain products from foreign suppliers to its own manufacturing facilities.
Further, as a result of declines in customer demand and a potential recessionary
economic environment, Renin has implemented various initiatives in an effort to
reduce the costs associated with its manufacturing and distribution facilities,
including the consolidation of certain of its manufacturing and distribution
facilities. As part of these efforts, Renin has (i) executed a lease agreement
for a new manufacturing and distribution facility near one of its existing
locations in Toronto, Canada, (ii) transferred a substantial portion of its
operations in its facility located in Montreal, Canada to its other
manufacturing and distribution facilities in the United States and Canada, and
(iii) exited its primary third-party logistics and warehousing facility in
January 2023. In connection with these efforts, Renin incurred costs in excess
of $2.0 million related to, among other things, severance expenses, relocation
and freight costs to transfer inventory, and capital expenditures for new
racking for storage and equipment. In addition, in anticipation of declines in
customer demand and a potential recessionary economic environment impacting
sales volumes related to its existing business, Renin is also actively seeking
to increase its market share by expanding its product mix with new and existing
customers and is also evaluating additional initiatives to reduce costs.



Although Renin has taken steps intended to mitigate the risks it faces and is
evaluating additional courses of action to further mitigate such factors,
Renin's currently expects that its operating results and gross margin percentage
will continue to be adversely impacted in 2023, particularly if it is unable to
generate additional sales in 2023 by increasing its market share. In addition,
in certain cases, Renin's negotiated price increases to customers do not fully
offset the increase in Renin's costs, and as a result, Renin's gross margins for
certain customers and products will continue to be negatively impacted unless it
can negotiate additional price increases in the future and/or Renin is able to
identify and implement alternative methods to source and manufacture certain
products in a more cost effective manner.



Further, Renin's efforts to mitigate its increase in costs have had and may
continue to have other negative impacts on Renin's operations. In particular,
the combination of higher inventory levels and the increased time between its
purchase of inventory and receipt of payments from customers has negatively
impacted its liquidity, and Renin is actively seeking to rationalize and lower
its inventory levels in order to reduce its investment in working capital in a
manner that does not disrupt its ability fulfill customer orders. In addition,
the negotiation of increased prices with customers increases the risk that
customers will pursue alternative sources for Renin's products, which may result
in Renin losing customers or require it to maintain or lower prices in an effort
to retain customers. Further, while Renin is generally seeking to diversify its
supply chain and limit its exposure to specific geographic locations and
suppliers, supply chain delays and the scarcity of products and raw materials
have made this difficult.

Renin is also negatively impacted by increases in interest rates, as its borrowings bear interest at variable rates, and the cost of its borrowings has substantially increased as a result of rising interest rates.

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Amendment and Restatement of TD Bank Credit Facility

In connection with the acquisition of Colonial Elegance in 2020, Renin amended
and restated its credit facility with TD Bank (the "TD Bank credit facility" or
the "credit facility") to include a term loan with an initial principal balance
of $30.0 million, increase the availability under its existing revolving line of
credit with TD Bank to $20.0 million, and extend the maturity of the credit
facility to October 2025.



In 2021, the TD Bank credit facility was amended to temporarily increase the
availability under the revolving line of credit from $20.0 million to $24.0
million through December 31, 2022, at which time the availability under the line
of credit was to revert to $20.0 million and any amounts outstanding in excess
of $20.0 million was to be repaid by Renin. The amendments to the credit
facility also (i) waived the requirement for Renin to comply with certain ratios
included in the financial covenants of the credit facility, (ii) temporarily
increased the maximum total leverage ratio included in the financial covenants
of the facility through December 31, 2022, (iii) modified the calculation of the
maximum total leverage ratio, and (iv) included an additional financial covenant
related to Renin meeting certain minimum levels of specified operating results
from November 2021 through December 2022. Further, the amendments prohibited
Renin from making distributions to BBX Capital through December 31, 2022. On
January 1, 2023, the financial covenants under the facility and Renin's ability
to make distributions to the Company were to revert to the requirements under
the facility prior to the amendments in 2021.



However, as Renin was not in compliance with certain financial covenants under
the facility from January through March 2022, the TD Bank credit facility was
further amended on May 9, 2022 to (i) require $13.5 million of funding from BBX
Capital to provide Renin funds to prepay $10.0 million of the term loan and to
provide additional working capital to Renin of $3.5 million, (ii) waive
compliance with the maximum total leverage ratio and fixed charge coverage ratio
included in the financial covenants of the facility until December 31, 2022,
(iii) waive compliance with the financial covenant requiring Renin to meet
certain minimum levels of specified operating results for January through March
2022, (iv) adjust the required minimum levels of specified operating results
through December 31, 2022 beginning in April 2022, and (v) amend the
modification period to the later of December 31, 2022 or upon Renin's compliance
with specified financial covenant ratios. The amendment also increased the
interest rates on amounts outstanding under the term loan and revolving line of
credit during the modification period to (i) the Canadian Prime Rate plus a
spread of 3.375% per annum, (ii) the United States Base Rate plus a spread of
3.00% per annum, or (iii) Term SOFR or Canadian Bankers' Acceptance Rate plus a
spread of 4.875% per annum. Under the terms of the amendment, the Term SOFR Rate
for loans with one to six-months terms are also subject to an additional credit
spread adjustment of 10 to 25 basis points per annum. Renin issued a $13.5
million promissory note to BBX Capital upon execution of the amendment on May 9,
2022, and pursuant to the terms of the amendment, BBX Capital funded $13.5
million of the note to Renin in May 2022. BBX Capital and Renin entered into a
subordination, assignment, and postponement agreement with TD Bank that requires
all present and future loans or advances from BBX Capital to Renin (including
the $13.5 million promissory note) be subordinated and repayments postponed
until the TD Bank credit facility has been paid or satisfied in full.



As of June 30, 2022 and continuing through January 2023, Renin was not in
compliance with the financial covenants under the credit facility which required
Renin to meet certain minimum levels of specified operating results, and while
TD Bank continued to allow Renin to utilize its revolving line of credit, TD
Bank sent formal notices of default to Renin between August 2022 and January
2023.



On February 3, 2023, the credit facility was further amended effective January
31, 2023 to, among other things, (i) temporarily increase the availability under
the revolving line of credit from $20.0 million to $22.0 million from January 1,
2023 through December 31, 2023, (ii) require $8.0 million of funding from BBX
Capital (including amounts funded by BBX Capital during the period from December
2022 through the date of the amendment) to provide Renin funds to prepay the
term loan by no less than $1.5 million and to provide additional working capital
to Renin, (iii) waive Renin's non-compliance with the financial covenants under
the credit facility through the date of the amendment, (iv) establish a
financial covenant requiring Renin to meet minimum levels of specified operating
results from January 2023 through December 2023, (v) redefine the maximum total
leverage ratio financial covenant under the credit facility and waive the
requirement to comply with the covenant until January 1, 2024, (vi) waive the
requirement to comply with the fixed charge coverage ratio financial covenant
until January 1, 2024, and (vii) amend the modification period to the later of
December 31, 2023 or upon Renin's compliance with specified financial covenant
ratios. The amendment also reduced the interest rates on amounts outstanding
under the credit facility during the modification period to (i) the Canadian
Prime Rate plus a spread of 2.875% per annum, (ii) the United States Base Rate
plus a spread of 2.50% per annum, or (iii) Term SOFR or Canadian Bankers'
Acceptance Rate plus a spread of 4.375% per annum. Under the terms of the
amendment, the Term SOFR Rate for loans with one to six-months terms are also
subject to an additional credit spread adjustment of 10 to 25 basis points per
annum. However, the amendment also increased the interest rates on amounts
outstanding under the credit facility during any periods in which the loan is in
default by 50 basis points per annum.



In December 2022, BBX Capital contributed $1.0 million of capital to Renin, and
in connection with the execution of the amendment, BBX Capital contributed $7.0
million of additional capital to Renin pursuant to the terms of the amendment.
Renin elected to use a portion of such funds to prepay $2.5 million of the term
loan.



If Renin's operating results and financial condition do not improve, Renin may
again fall out of compliance with the terms of the TD Bank credit facility. If
Renin falls out of compliance and is unable to obtain additional waivers or
modifications of the credit facility, Renin may lose availability under
its revolving line of credit, be required to provide additional collateral, or
repay all or a portion of its borrowings, any of which would have a material
adverse effect on the Company's liquidity, financial position, and results of
operations.



See Note 12 to the Company's consolidated financial statements included in Item
8 of this annual report for additional information with respect to the TD Bank
credit facility.





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Supplier Dispute



In October 2020, Renin incurred approximately $6.0 million in costs for the
expedited shipment of products to Renin from a foreign supplier and an
additional $2.0 million in costs for the expedited shipment of product displays
from the same supplier. Renin asserted that the supplier was liable for the
additional shipping costs based on the late delivery of products and certain
displays purchased from the supplier, while the supplier disputed
that liability.



Renin recognized the cost of the products and related shipping costs upon the
sale of such products in cost of trade sales in the Company's statement of
operations and comprehensive income during the year ended December 31, 2020,
while the costs of the displays and related shipping were deferred and are being
amortized over the period in which the Company expects to benefit from their
use. In December 2021, Renin and the foreign supplier settled the dispute and
outstanding amounts due to the supplier for $4.2 million. That amount was paid
by Renin to the supplier in two equal installments in December 2021 and June
2022. As Renin had previously accrued a liability of $8.1 million for amounts
due to the supplier during the year ended December 31, 2020, Renin reduced its
cost of trade sales by $2.9 million for the year ended December 31, 2021 and
reduced the unamortized balance of its display contract asset by $1.0 million as
of December 31, 2021.



Results of Operations



Information regarding the results of operations for Renin is set forth below
(dollars in thousands):



                                                                                 Change         Change
                                      For the Years Ended December 31,           2022 vs        2021 vs
                                      2022            2021          2020          2021           2020
Trade sales                       $    131,951        146,255        93,036       (14,304 )       53,219
Cost of trade sales                   (127,623 )     (130,366 )     (83,563 )       2,743        (46,803 )
Gross margin                             4,328         15,889         9,473       (11,561 )        6,416
Interest expense                        (3,588 )       (1,830 )        (615 )      (1,758 )       (1,215 )
Selling, general and
administrative expenses                (17,077 )      (15,857 )     (11,735 )      (1,220 )       (4,122 )
Total operating loss                   (16,337 )       (1,798 )      (2,877 )     (14,539 )        1,079
Other expense                              (57 )            -            (3 )         (57 )            3
Foreign exchange gain (loss)               950            812          (692 )         138          1,504
Loss before income taxes          $    (15,444 )         (986 )      (3,572 )     (14,458 )        2,586
Gross margin percentage                   3.28 %        10.86 %       10.18 %       (7.58 )%        0.68 %
SG&A as a percent of trade
sales                                    12.94 %        10.84 %       12.61 %        2.10 %        (1.77 )%
Expenditures for property and
equipment                         $      1,653          3,099         2,118        (1,446 )          981
Depreciation and amortization     $      3,344          3,037         1,380           307          1,657
Debt accretion and amortization   $        128            113           243            15           (130 )
ASC 842 straight line rent
adjustments                       $        375            347            87            28            260




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Renin's loss before income taxes for the year ended December 31, 2022 compared to the same 2021 period increased by $14.5 million primarily due to the following:

? A decline in Renin's sales as compared to the same period in 2021 due to,

among other things, (i) a decline in customer demand, (ii) backordered

inventory resulting from supply chain disruptions, and (iii) one of Renin's

major customers discontinuing its purchase of certain products from Renin in

late 2021;

? A decrease in Renin's gross margin percentage primarily as a result of (i)

increased costs of shipping, raw materials and labor, (ii) delays in the

implementation of price increases to certain customers, and (iii) sales of

slow-moving inventory at cost;

? An increase in interest expense associated with (i) an increase in interest

rates from the modification of the TD Bank credit facility in May 2022, (ii)

rising rates on Renin's variable rate debt, and (iii) interest expense

associated with BBX Capital's loan to Renin; and

? An increase in selling, general, and administrative expenses primarily due to

(i) severance associated with a former executive, (ii) severance expenses

    related to the transition of various operations out of Renin's facility in
    Montreal, Canada, and (iii) higher labor costs and professional fees.






Other



Other in the Company's segment information includes its investments in other
operating businesses, including a restaurant located in South Florida that was
acquired through a loan foreclosure and an insurance agency.



During the years ended December 31, 2022 and 2021, the Company recognized income
before income taxes related to these other businesses of $1.0 million and $1.4
million, respectively, compared to a loss from continuing operations before
income taxes of $2.9 million during the year ended December 31, 2020. During the
year ended December 31, 2021, the Company reversed $0.3 million in rent expense
as a result of rent abatements obtained by the restaurant located in South
Florida due to the effects of the COVID-19 pandemic on its operations.

In February 2023, the Company sold substantially all of the assets of its insurance agency business, although the entity will continue to provide risk management advisory services to the Company and its affiliates, including Bluegreen Vacations.

Reconciling Items and Eliminations

Reconciling items and eliminations in the Company's segment information primarily includes the following:

  ? BBX Capital's corporate general and administrative expenses;
  ? Interest income on the note receivable from Bluegreen Vacations;
  ? Interest income on interest-bearing cash accounts; and
  ? Interest expense capitalized in connection with the development and
    construction of real estate.

Corporate General and Administrative Expenses

BBX Capital's corporate general and administrative expenses for the years ended
December 31, 2022, 2021, and 2020 were $22.5 million, $15.1 million, and
$15.9 million, respectively. During the years ended December 31, 2022, 2021 and
the three months ended December 31, 2020, BBX Capital's corporate general and
administrative expenses consisted of the actual costs of various support
functions, including executive compensation, legal, accounting, human resources,
investor relations, and executive offices, while BBX Capital's corporate general
and administrative expenses for the periods through September 30, 2020 consisted
primarily of an allocation of the cost of services provided by Bluegreen
Vacations to the Company for these support functions, most of which were
transferred to BBX Capital in connection with the spin-off from Bluegreen
Vacations.



The increase in corporate general and administrative expenses for the year ended
December 31, 2022 compared to the 2021 period primarily reflects higher
executive compensation, including $3.4 million in share based compensation
expense from restricted stock awards granted in January 2022, and rent expense
associated with the Company's new corporate headquarters that opened in late
2021.



Interest Income



BBX Capital's interest income for the year ended December 31, 2022  was
$4.1 million and includes (i) $3.0 million of interest income on its note
receivable from Bluegreen Vacations, (ii) $0.2 million of interest income from
short-term investments, (iii) the elimination of interest income recognized by a
wholly-owned subsidiary of the Company relating to the credit facility provided
to IT'SUGAR, and (iv) the elimination of interest income recognized by the
Company relating to the credit facility provided to Renin. BBX Capital's
interest income for the year ended December 31, 2021 and 2020 was $4.6 million
and $1.2 million, respectively, which includes $4.5 million and $1.1 million,
respectively, of interest income from its note receivable from Bluegreen
Vacations.





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(Provision) Benefit for Income Taxes

The Company's effective income tax rate was approximately 35%, 27%, and 19%
during the years ended December 31, 2022, 2021, and 2020, respectively. During
the year ended December 31, 2022, the provision for income taxes was different
than the expected federal income tax rate of 21% primarily due to nondeductible
executive compensation, the impact of state income taxes and an increase in the
Canadian valuation allowance. The provision for income taxes was different than
the expected federal income tax rate of 21% during the year ended December 31,
2021 primarily due to the impact of state income taxes and an increase in the
Canadian valuation allowance. The difference for the year ended December 31,
2020 was due to the impact of nondeductible executive compensation and state
income taxes.

Net Income Attributable to Noncontrolling Interests

Redeemable Noncontrolling Interest

During the period from January 1, 2020 to September 22, 2020, the Company's
consolidated financial statements included the results of operations and
financial position of IT'SUGAR, a majority-owned subsidiary in which it held a
controlling financial interest, and as a result, the Company was required to
attribute net income or loss to a redeemable noncontrolling interest in IT'SUGAR
during such periods. The net loss attributable to the redeemable noncontrolling
interest in IT'SUGAR was $4.1 million for the period from January 1, 2020 to
September 22, 2020. As a result of the filing of the Bankruptcy Cases by
IT'SUGAR and its subsidiaries, the Company deconsolidated IT'SUGAR as of
September 22, 2020 and derecognized the redeemable noncontrolling interest in
IT'SUGAR. However, as a result of IT'SUGAR emerging from the Bankruptcy Cases,
the Company consolidated the results of IT'SUGAR into its consolidated financial
statements as of June 17, 2021 and is again attributing net income or loss to
the redeemable noncontrolling interest in IT'SUGAR as of and subsequent to that
date. For the years ended December 31, 2022, 2021 and 2020, the net income
attributable to the redeemable noncontrolling interest in IT'SUGAR was $20,000,
$0.1 million and ($4.1 million), respectively.

Other Noncontrolling Interests

Other noncontrolling interests included in the Company's consolidated statements
of operations and comprehensive income (loss) as of December 31, 2022, 2021, and
2020 include (i) a noncontrolling equity interest in a restaurant the Company
acquired through foreclosure and (ii) noncontrolling interests in IT'SUGAR FL
II, LLC from October 2021 through December 2022. In December 2022, the Company
acquired the noncontrolling interests in IT'SUGAR FL II, LLC.



During the years ended December 31, 2022, 2021, and 2020, the net income (loss)
to the noncontrolling interests was ($0.4 million), $14,000, and ($0.7 million),
respectively.



Consolidated Cash Flows

A summary of our consolidated cash flows is set forth below (in thousands):

                                                      For the Years Ended December 31,
                                                   2022              2021            2020
Cash flows provided by (used in) operating
activities                                     $     36,336            37,828          (6,183 )
Cash flows provided by (used in) investing
activities                                              578            36,785         (52,399 )
Cash flows (used in) provided by financing
activities                                          (27,628 )         (45,955 )       127,682
Net increase in cash, cash equivalents and
restricted cash                                $      9,286            28,658          69,100
Cash, cash equivalents and restricted cash
at beginning of period                              119,045            90,387          21,287
Cash, cash equivalents and restricted cash
at end of period                               $    128,331           119,045          90,387




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Cash Flows from Operating Activities

The Company's cash provided by operating activities decreased by $1.5 million during the year ended December 31, 2022 compared to the same period in 2021 primarily due to lower sales of real estate inventory by BBXRE and higher operating losses at Renin, partially offset by higher operating distributions from unconsolidated real estate joint ventures.

The Company's cash provided by operating activities increased by $44.0 million
during the year ended December 31, 2021 compared to the same period in 2020
primarily due to higher sales of real estate inventory by BBXRE, higher
operating distributions from unconsolidated real estate joint ventures, and
lower operating losses at BBX Sweet Holdings, partially offset by cash used in
Renin's operating activities, including inventory purchases. The decrease in
operating losses at BBX Sweet Holdings during the 2021 period compared to the
2020 period was primarily the result of operating losses incurred by IT'SUGAR
during the 2020 period as a result of the impact of the COVID-19 pandemic on its
operations.

Cash Flows from Investing Activities

Cash provided by investing activities decreased by $36.2 million during the year
ended December 31, 2022 compared to the same period in 2021 primarily due to the
purchase of $34.0 million of marketable securities in the 2022 period, the
receipt of a $25.0 million partial prepayment of the note receivable from
Bluegreen Vacations in the 2021 period, $7.5 million of lower distributions from
unconsolidated real estate joint ventures, and $6.9 million of cash acquired in
connection with the consolidation of IT'SUGAR in the 2021 period, partially
offset by $21.2 million of proceeds from the maturity of marketable securities,
and a $23.5 million increase in proceeds from the sale of real estate
held-for-sale.



Cash provided by investing activities increased by $89.2 million during the year
ended December 31, 2021 compared to the same period in 2020 primarily due to
$42.1 million of cash paid for the acquisition of Colonial Elegance in the 2020
period, receipt of a $25.0 million partial prepayment of the note receivable
from Bluegreen Vacations in the 2021 period, higher distributions from
unconsolidated real estate joint ventures, and $6.9 million of cash acquired in
connection with the consolidation of IT'SUGAR.

Cash Flows from Financing Activities

Cash used in financing activities decreased by $18.3 million during the year
ended December 31, 2022 compared to the same period in 2021, which was primarily
due to $20.5 million of lower repurchases of Class A and Class B Common Stock
during the 2022 period, partially offset by higher distributions to
noncontrolling interest associated with IT'SUGAR's acquisition of the
noncontrolling interests in IT'SUGAR FL II, LLC.



Cash used in financing activities increased by $173.6 million during the year
ended December 31, 2021 compared to the same period in 2020, which was primarily
due to a $94.3 million net transfer of cash from Bluegreen Vacations during the
2020 period, the repurchase of $34.3 million of Class A and Class B Common Stock
during the 2021 period, and higher net borrowings during the 2020 period
primarily as a result of borrowings to fund the acquisition of Colonial
Elegance.



Commitments



As of December 31, 2022, the Company's material commitments primarily included
the required payments due on notes payable and other borrowings and commitments
under noncancelable operating leases.



The following table summarizes the contractual minimum principal and interest
payments required on the Company's outstanding debt and payments required on the
Company's noncancelable operating leases by period due date as of December 31,
2022 (in thousands):



                                                       Payments Due by Period
                                                                                   Unamortized
                                                                                      Debt
                         Less than          1 - 3         4 - 5      After 5        Issuance
Contractual
Obligations (1)           1 Year          Years         Years         Years           Costs           Total
Notes payable and
other borrowings (2)    $     7,509        29,259           440         1,591              (256 )      38,543
Noncancelable
operating leases             24,851        42,111        31,250        48,568                 -       146,780
Purchase an
additional 40%
interest in the
Altman Companies (3)          8,110             -             -         2,400                 -        10,510
Total contractual
obligations                  40,470        71,370        31,690        52,559              (256 )     195,833
Interest Obligations
(2)(4)
Notes payable and
other borrowings              3,050         4,421           138         1,214                 -         8,823
Total contractual
interest                      3,050         4,421           138         1,214                 -         8,823
Total contractual
obligations             $    43,520        75,791        31,828        53,773              (256 )     204,656

(1) The above table excludes certain additional amounts that the Company may

invest in the Altman Companies or its sponsored joint ventures.

(2) Obligations under Renin's TD Bank credit facility are presented based on the

scheduled principal payments and stated maturity date of October 2025, as

amended by the amendment to the loan agreement executed in February 2023.

(3) The $8.1 million represents the amount paid by BBXRE in January 2023 for a

40% interest in the Altman Companies, which reflects the base purchase price

of $9.4 million, an additional $0.1 million of reimbursements for

predevelopment expenditures incurred at the time of the acquisition, and a

downward adjustment of $1.4 million to reflect an estimated working capital

deficit calculated pursuant to the terms of the operating agreement.

Pursuant to the terms of the operating agreement of the Altman Companies,

the final working capital adjustment amount will be determined by BBXRE and

Mr. Altman following the closing and may result in the payment of additional

consideration to Mr. Altman or a refund to BBXRE. The $2.4 million

represents the amount owed to Mr. Altman relating to the purchase of

the remaining 10% in the Altman Companies in January 2023, which is payable

upon the earlier of the termination of Mr. Altman's employment with the

Altman Companies or November 30, 2028.

(4) Assumes that the scheduled minimum principal payments are made in accordance

with the table above and the interest rate on variable rate debt remains the

      same as the rate as of December 31, 2022.




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Liquidity and Capital Resources

As of December 31, 2022, the Company had cash, cash equivalents, and short-term
investments of approximately $145.4 million. Management believes that the
Company has sufficient liquidity to fund operations, including anticipated
working capital, capital expenditure, and debt service requirements, and respond
to the challenges related to, inflationary trends, increased interest rates, and
the current economic environment for the foreseeable future, subject to
mitigation and cost reduction efforts and management's determination of whether
and/or the extent to which it will fund the operations and commitments of its
subsidiaries. As previously disclosed, management has evaluated and will
continue to evaluate the potential operating deficits, commitments, and
liquidity requirements of its subsidiaries and may determine not to provide
additional funding or capital to subsidiaries whose operations it believes may
not be sustainable or do not support additional investment.



The Company's principal sources of liquidity have historically been (i) its
available cash, cash equivalents, and short-term investments, (ii) distributions
from unconsolidated real estate joint ventures, and (iii) proceeds received from
sales of real estate. In addition to these sources of liquidity, the Company
expects to receive quarterly interest payments on the promissory note that was
issued by Bluegreen Vacations in favor of BBX Capital in connection with the
spin-off of the Company. The original principal amount of the note was $75.0
million; however, in December 2021, Bluegreen Vacations prepaid $25.0 million of
the principal balance, reducing the outstanding balance to $50.0
million. Amounts outstanding under the note accrue interest at a rate of 6% per
annum, with interest payments scheduled to occur on a quarterly basis. However,
Bluegreen Vacations may elect to defer such quarterly interest payments, with
interest on the entire outstanding balance thereafter to accrue at a cumulative,
compounded rate of 8% per annum until such time as Bluegreen Vacations is
current on all accrued payments under the note, including deferred interest. All
outstanding amounts under the note will become due and payable on September 30,
2025 or earlier upon certain other events, and Bluegreen Vacations is permitted
to prepay the note in whole or in part at any time.



The Company believes that its current financial condition will allow it to meet
its anticipated near-term liquidity needs. The Company may also seek additional
liquidity from outside sources, including traditional bank financing, secured or
unsecured indebtedness, or the issuance of equity and/or debt securities.
However, these alternatives may not be available to the Company on attractive
terms, or at all. The inability to raise any needed funds through the sources
discussed above would have a material adverse effect on the Company's business,
results of operations, and financial condition.

Anticipated and Potential Liquidity Requirements

The Company currently expects to use its available liquidity to fund operations
(including corporate expenses, working capital, capital expenditures, debt
service requirements, and the Company's other commitments described above) and
make additional investments in real estate, its existing operating businesses,
or other opportunities, including the potential repurchase of common stock.
However, as discussed above, management intends to evaluate any operating
deficits, commitments, and liquidity requirements of its subsidiaries as a
result of inflationary trends, higher interest rates, and general economic
conditions and, may make a determination that it will not provide additional
funding or capital to its subsidiaries.



BBX Capital



In January 2022, the Board of Directors approved a share repurchase program
which authorizes the repurchase of up to $15.0 million of shares of the
Company's Class A and Class B Common Stock. The repurchase program authorizes
the Company, in management's discretion, to repurchase shares from time to time
subject to market conditions and other factors. The timing, price, and number of
shares which may be repurchased under the program in the future will be based on
market conditions, applicable securities laws, and other factors considered by
management. Share repurchases under the program may be made from time to time
through solicited or unsolicited transactions in the open market or in privately
negotiated transactions. The share repurchase program does not obligate the
Company to repurchase any specific amount of shares and may be suspended,
modified, or terminated at any time without prior notice. During the year ended
December 31, 2022, the Company repurchased 115,782 shares of its Class A Common
Stock under this repurchase program at an average per share purchase price of
$9.27, including fees. The Company remained authorized under the repurchase
program to purchase up to $13.9 million of shares of the Company's Class A and
Class B Common Stock as of December 31, 2022.



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BBX Capital Real Estate



The Altman Companies



Since November 2018, BBX Capital Real Estate has owned a 50% equity interest in
the Altman Companies, a developer and manager of multifamily rental apartment
communities.



On January 31, 2023, BBXRE closed on the acquisition of an additional 40% equity
interest in the Altman Companies from Mr. Joel Altman for $8.1 million,
reflecting a base purchase price of $9.4 million, an additional $0.1 million of
reimbursements for predevelopment expenditures incurred at the time of the
acquisition, and a downward adjustment of $1.4 million to reflect an estimated
working capital deficit calculated pursuant to the terms of the operating
agreement of the Altman Companies. Pursuant to the terms of the operating
agreement, the final working capital adjustment amount will be determined by
BBXRE and Mr. Altman following the closing and may result in the payment of
additional consideration to Mr. Altman or a refund to BBXRE. In connection with
the acquisition of the 40% interest from Mr. Altman, BBXRE also acquired the
remaining 10% equity interest owned by Mr. Altman. Pursuant to the terms of
this acquisition, the parties agreed that Mr. Altman will remain employed by the
Altman Companies and that the  $2.4 million payment for the remaining 10% equity
interest will be deferred until the earlier of (i) the termination of Mr.
Altman's employment from the Altman Companies or (ii) November 30, 2028. Under
the terms of the agreement between the parties, Mr. Altman will continue to
invest in development joint ventures originated by the Altman Companies, and if
Mr. Altman does not invest in certain additional joint ventures, BBXRE will be
entitled to offset his required capital contribution against the deferred $2.4
million payable to Mr. Altman.



Although the Altman Companies generates revenues from the performance of
development, general contractor, leasing, and property management services to
the joint ventures that are formed to invest in the development projects that it
originates, it is expected that any profits generated for BBXRE through the
Altman Companies will primarily be through the equity distributions that
BBXRE receives through its investment in the managing member of such joint
ventures. Therefore, as the timing of any such distributions to BBXRE is
generally contingent upon the sale or refinancing of a completed development
project, it is anticipated that BBXRE will be required to contribute capital to
the Altman Companies for its ongoing operating costs and predevelopment
expenditures, as well as to the managing member of newly formed joint ventures.
As previously discussed, as a result of current market conditions, many projects
previously in the Altman Companies' development pipeline no longer meet its
investment criteria, and the Altman Companies expects to incur predevelopment
expenditures in 2023 in order to identify new projects for its development
pipeline. Further, previously anticipated fee income will not be generated from
development projects that are no longer in its development pipeline. As a
result, BBXRE currently anticipates that it will invest in excess of $10.0
million in the Altman Companies and certain related joint ventures during the
year ended December 31, 2023 for planned predevelopment expenditures, ongoing
operating costs, and potential operating shortfalls related to certain projects,
and other than contributions to certain existing development projects for which
the equity contributions to the joint ventures are expected to be funded over
time, BBXRE does not currently expect to invest material amounts in the managing
member of new development joint ventures during the year ended December 31, 2023
based on its current pipeline of new potential development projects. However, if
certain projects that the Altman Companies previously determined were unlikely
to commence become financially viable as a result of changes in market
conditions, BBXRE expects that it would invest in the managing member of
development joint ventures formed to invest in such projects.



BBX Logistics Properties

BBXRE currently expects that it may invest in excess of $10.0 million in its logistics real estate division during the year ended December 31, 2023 for investments in new developments, predevelopment expenditures, and ongoing operating costs.

If the division commences the development of warehouse and logistics facilities,
BBXRE expects that it will seek to develop such projects through joint ventures
with third party investors and that it will invest in the managing member of the
joint ventures formed to invest in such development projects. While there is no
assurance that this will be the case, if joint ventures are formed to invest in
projects, BBXRE expects that it will be reimbursed for all or a portion of its
previously incurred predevelopment expenditures by such ventures. Further, in
the event that BBXRE closes on development financing for such projects, BBXRE
expects that (i) it would be required to contribute at least $5.0 million to a
wholly-owned subsidiary that will provide guarantees on the indebtedness for the
funded projects and (ii) such cash would be restricted from being utilized in
BBXRE's other operations.



BBXRE has entered into agreements to acquire five land parcels for the purpose
of developing logistics facilities for an aggregate purchase price of
approximately $58.0 million. BBXRE completed due diligence on two of these
parcels, which have an aggregate purchase price of approximately $35.0 million,
and paid nonrefundable deposits totaling $1.5 million on these parcels, although
the deposit on one of these parcels is contingently refundable if BBXRE is
unable to obtain entitlements for the development. The agreements for the
remaining three parcels are subject to the successful completion of due
diligence, and the escrowed deposits paid by BBXRE in connection with the
agreements are refundable until the end of the applicable due diligence periods.
As indicated above, if BBXRE moves forward with any or all of these projects,
BBXRE expects that it will develop the projects through joint ventures with
third party investors and, in such case, it will assign the agreements to the
applicable joint ventures. Accordingly, if BBXRE moves forward with any or all
of these projects, BBXRE expects that it would fund a portion of the land and
development costs as the managing member and would seek third party debt and
equity financing for the remainder of such costs.



Other



The operating agreements of certain of real estate joint ventures in which BBXRE
is an investor contain customary buy-sell provisions which could result in
either the sale of BBXRE's interest or the use of available cash to acquire the
partner's interest, and the Company's commitments and liquidity requirements
described above do not include amounts that the Company could pay as a result of
the initiation of these provisions.



BBX Sweet Holdings

IT'SUGAR currently expects to incur in excess of $15.0 million of capital expenditures during the year ended December 31, 2023 to fund construction costs associated with new retail locations and the expansion of existing retail locations.

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Renin



During the years ended December 31, 2022 and 2021, BBX Capital provided funds to
Renin at various times to provide additional liquidity for working capital, make
partial prepayments on Renin's term loan with TD Bank, and fund certain one-time
expenditures, including payments to settle a dispute with a supplier and costs
related to the transition of operations from facility in Montreal, Canada to its
other facilities.



As of December 31, 2022, the aggregate amount outstanding under Renin's TD Bank
credit facility was $34.5 million, and in February 2023, BBX Capital made a $7.0
million capital contribution to Renin in order to fund a $2.5 million partial
prepayment of Renin's term loan with TD Bank and to provide additional liquidity
for working capital requirements. While BBX Capital may consider providing
additional funds to Renin in future periods to fund working capital and its
commitments, BBX Capital's management will continue to evaluate the operating
results, financial condition, commitments and prospects of Renin on an ongoing
basis and may determine that it will not provide additional funding or capital
to Renin.

Credit Facilities with Future Availability

As of December 31, 2022, BBX Capital and certain of its subsidiaries had the following credit facilities with future availability, subject to eligible collateral and the terms of the facilities, as applicable.

Toronto-Dominion Commercial Bank ("TD Bank") Credit Facility. Renin has a credit
facility with TD Bank that includes a $14.8 million term loan (the "Term Loan")
and a revolving operating loan of up to $24.0 million (which amount was
decreased as described below) (the "Operating Loan"), both of which mature in
October 2025. As of December 31, 2022, the outstanding amounts under the term
loan and revolving credit facility were $14.7 million and $19.8 million,
respectively, with effective interest rates of 8.92% and 8.98%, respectively. As
Renin was out of compliance with the financial covenants under its credit
facility with TD Bank as of December 31, 2022, Renin's line of credit under the
facility had no contractually committed availability as of December 31, 2022.



As previously described, Renin's credit facility was amended in July 2021,
November 2021, May 2022 and February 2023. As a result of such amendments, the
availability under the Operating Loan was increased from $20.0 million to
$24.0 million through December 31, 2022 and decreased to $22.0 million in
February 2023. As of December 31, 2023, the availability under the line of
credit will revert to $20.0 million and any amounts outstanding in excess of
$20.0 million must be repaid by Renin. In addition, the February 2023 amendment
to the credit facility, (i) adjusted the required minimum levels of specified
operating results through December 31, 2023 beginning in January 2023 (ii)
redefined the Total Leverage Ratio financial covenant and waived compliance with
this covenant until January 1, 2024, (iii) waived the Fixed Charge Coverage
Ratio financial covenant until January 1, 2024 and (iv) amended the modification
period to December 31, 2023. The amendment also reduced the interest rates on
amounts outstanding under the term loan and revolving line of credit during the
modification period to (i) the Canadian Prime Rate plus a spread of 2.875% per
annum, (ii) the United States Base Rate plus a spread of 2.50% per annum, or
(iii) Term SOFR or Canadian Bankers' Acceptance Rate plus a spread of 4.375% per
annum. Under the terms of the amendment, the Term SOFR Rate for loans with one
to six-months terms are also subject to an additional credit spread adjustment
of 10 to 25 basis points per annum. Further, the February 2023 amendment
prohibits Renin from making distributions to BBX Capital through December 31,
2023. On January 1, 2024, the financial covenants under the facility and Renin's
ability to make distributions to BBX Capital will revert to the requirements
under the facility prior to the amendments in 2021.



LOCS Credit Facility. In July 2021, BBX Sweet Holdings and certain of its
subsidiaries, including Las Olas Confections and Snacks, entered into a credit
agreement (the "LOCS Credit Facility") with IberiaBank which provides for a
revolving line of credit of up to $2.5 million that matures in July 2023.
Amounts outstanding under the LOCS Credit Facility bear interest at the higher
of the Wall Street Journal Prime Rate plus 50 basis points or 3.0% per annum,
and the facility requires monthly payments of interest only, with any
outstanding principal and accrued interest due at the maturity date. The LOCS
Credit Facility is collateralized by a blanket lien on all of the assets of the
borrowers under the facility and is guaranteed by BBX Capital. The facility
contains certain financial covenants, including a minimum liquidity requirement
for BBX Capital as guarantor under the facility and a requirement that the
borrowers maintain a zero balance on the facility for thirty consecutive days
during each calendar year during the term of the facility. As of December 31,
2022, the outstanding amount under the credit facility was $2.3 million, and the
effective interest rate was 8.0%.



IT'SUGAR Credit Facility. In January 2023, IT'SUGAR entered into a credit
agreement with Regions Bank (the "IT'SUGAR credit facility") which provides for
a revolving line of credit of up to $5.0 million that matures in June 2024.
Amounts outstanding under the IT'SUGAR credit facility bear interest at the
higher of a rate equal to the Regions Bank Prime Rate minus 1.50% per annum. or
0% per annum, and the facility requires monthly payments of interest only, with
any outstanding principal and accrued interest due at the maturity date. BBXRE
pledged a $5.0 million certificate of deposit at Regions Bank to secure the
repayment of the IT'SUGAR credit facility. The facility contains various
customary financial and reporting covenants.









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Off-balance-sheet Arrangements

BBX Capital guarantees certain obligations of its wholly-owned subsidiaries and
unconsolidated real estate joint ventures, which are described in further detail
in Item 8 - Note 15 of this Annual Report.



The Company has investments in joint ventures involved in the development of
multifamily rental apartment communities, as well as single-family master
planned for sale housing communities. The Company's investments in these joint
ventures are accounted for under the equity method of accounting, and as a
result, the Company does not recognize the assets and liabilities of these joint
ventures in its financial statements. As of December 31, 2022 and 2021, the
Company's investments in these joint ventures totaled $49.4 million and
$53.0 million, respectively. These unconsolidated real estate joint ventures
generally finance their activities with a combination of debt financing and
equity. The Company generally does not directly guarantee the financing of these
joint ventures, other than as described in further detail in Item 8 - Note 15 of
this Annual Report on Form 10-K, and the Company's maximum exposure to losses
from these joint ventures is its equity investment. The Company is typically not
obligated to fund additional capital to its joint ventures; however, the
Company's interest in a joint venture may be diluted if the Company elects not
to fund a joint venture capital call.



Critical Accounting Policies



Management views critical accounting policies as accounting policies that are
important to the understanding of our financial statements and also involve
estimates and judgments about inherently uncertain matters. In preparing the
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the consolidated statements
of financial condition and assumptions that affect the recognition of income and
expenses on the consolidated statements of operations and comprehensive income
(loss) for the periods presented. On an ongoing basis, management evaluates its
estimates, including, but not limited to, those that relate to the determination
of: the recognition of revenue; the recovery of the carrying value of real
estate inventories; the fair value of assets measured at, or compared to, fair
value on a non-recurring basis, such as assets held for sale, intangible assets,
other long-lived assets, and goodwill; the valuation of assets and liabilities
assumed in the acquisition of a business; the amount of deferred tax valuation
allowance and accounting for uncertain tax positions; and the estimate of
contingent liabilities related to litigation and other claims and assessments.
The accounting policies and estimates that we have identified as critical
accounting policies are: the recognition of revenue; evaluating goodwill for
impairment; and evaluating long-lived assets and definite lived intangible
assets for impairment. Management bases its estimates on historical experience
and on various other assumptions that it believes to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ materially from these estimates under
different assumptions and conditions. If actual results significantly differ
from management's estimates, our results of operations and financial condition
could be materially and adversely impacted.

Revenue Recognition - Variable Consideration on Trade Sales and Sales of Real Estate Inventory

The Company's trade sales are generally sold with a right of return, and the
Company may provide other sales credits or incentives, such as volume discounts
or rebates. Additionally, the Company is entitled to contingent consideration on
certain single-family lot sales to homebuilders. These programs are accounted
for as variable consideration when determining the amount of revenue to
recognize upon transfer of control. Estimates of contingent consideration,
returns, and incentives are calculated using the expected value method and
updated at the end of each reporting period when additional information becomes
available. Variable consideration estimates are based on historical experience
adjusted for, among other things, current and expected economic conditions and
sales trends. These estimates rely on assumptions and judgments regarding issues
where the outcome is unknown, and actual results or values may differ
significantly from these estimates. A significant change in the timing of
revenue recognized could occur if actual variable consideration is significantly
different than our estimates.

Evaluating Goodwill for Impairment

The process of evaluating goodwill for impairment involves the determination of
the fair value of the Company's reporting units. Inherent in such fair value
determinations are certain judgments and estimates relating to future cash
flows, including the Company's interpretation of current economic indicators and
market valuations, and assumptions about the Company's strategic plans with
regard to its operations. Due to the uncertainties associated with such
evaluations, actual results could differ materially from such estimates. The
Company's goodwill as of December 31, 2022 was $18.4 million consisting of $4.1
million and $14.3 million of goodwill in the Renin and BBX Sweet Holdings
reporting units, respectively.



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During the year ended December 31, 2020, the Company concluded that the effects
of the COVID-19 pandemic, including the recessionary economic environment and
the impact on certain of the Company's operations, indicated that it was more
likely than not that the fair values of certain of its reporting units with
goodwill had declined below the respective carrying amounts of such reporting
units as of March 31, 2020. As a result, the Company tested the goodwill
associated with such reporting units for impairment by estimating the fair
values of the respective reporting units as of March 31, 2020 and recognized
goodwill impairment losses of $20.3 million associated with IT'SUGAR and
$2.1 million associated with certain of its other reporting units. On
September 22, 2020, the Company deconsolidated IT'SUGAR as a result of IT'SUGAR
filing the Bankruptcy Cases and derecognized the remaining IT'SUGAR goodwill
balance of approximately $14.9 million as of that date. During the year ended
December 31, 2021, IT'SUGAR emerged from bankruptcy, and the Company
reconsolidated IT'SUGAR. The Company accounted for the consolidation of IT'SUGAR
upon under the acquisition method of accounting, which requires that the assets
acquired and liabilities assumed associated with an acquiree be recognized at
their fair values at the consolidation date. As a result, the Company remeasured
the carrying value of its equity interests in IT'SUGAR at fair value with the
remeasurement adjustment recognized in the Company's statement of operations,
and recognized goodwill based on the difference between (i) the fair values of
IT'SUGAR's identifiable assets and liabilities at the consolidation date and
(ii) the fair values of the Company's interests in IT'SUGAR and the
noncontrolling interests in IT'SUGAR. The Company recognized $14.3 million of
goodwill upon the consolidation of IT'SUGAR. Inherent in the Company's
determinations of fair value of IT'SUGAR's assets and liabilities are certain
judgments and estimates relating to future cash flows, including the Company's
assessment of current economic indicators and market valuations, and assumptions
about the Company's strategic plans with regard to its operating businesses.



During the three months ended June 30, 2022, the Company concluded that
inflationary pressures, the recent decline in market valuations, increases in
interest rates, a decline in consumer demand, the current economic and
geopolitical environment, and the increased likelihood of a recessionary
environment in the foreseeable future, when combined with the ongoing nature of
Renin's margin compression and recent decline in customer demand, indicated that
it was necessary to quantitatively test whether the fair value of the Renin
reporting unit had declined below its carrying amount as of June 30, 2022. As a
result, the Company quantitatively tested Renin's goodwill for impairment by
estimating the fair value of the Renin reporting unit as of June 30, 2022 and
concluded that its goodwill was not impaired, as the estimated fair value of the
Renin reporting unit was in excess of the carrying amount of the reporting unit.

The Company performed its annual goodwill impairment test as of December 31, 2022 and 2021 and determined that its goodwill was not impaired.

Due to the uncertainties associated with such evaluations, changes in the
assumptions could have a materially effect on such estimates, particularly in
light of the ongoing disruptions and uncertainty in the U.S. and global
economics and global supply chains. In particular, the Company's estimated fair
value of the Renin reporting unit included, among other things, various
assumptions related to the impact of disruptions and uncertainty in the U.S. and
global economies and global supply chains on Renin's operations, and the
estimate of the fair value of Renin under the discounted cash flow methodology
assumed that the supply chain disruptions and material shortages that are
currently having a negative impact on Renin's gross margins will be resolved by
the end of 2023. If the ongoing supply chain disruptions and material shortages
are not resolved within the anticipated timeframes or customer demand is
materially impacted by current economic conditions, the estimated fair value of
the Renin reporting unit may continue to decline, and the Company may be
required to record goodwill impairment charges in future periods. Similarly,
with respect to IT'SUGAR, the Company estimates that i) there will not be a
material permanent decline in the demand for IT'SUGAR's products in the future,
ii) IT'SUGAR will ultimately be able implement its long-term strategy to
reinvest in and grow its business, and iii) IT'SUGAR will be able to manage
supply chain and cost pressures through price increases.

Evaluating Long-lived Assets and Definite-lived Intangible Assets for Impairment

The Company evaluates its long-lived assets and definite-lived intangible
assets, including property and equipment, and real estate held-for-investment,
for potential impairment whenever events or changes in circumstances indicate
that the carrying amounts of such assets may not be recoverable. The carrying
amounts of assets are not considered recoverable when the carrying amounts
exceed the undiscounted cash flows estimated to be generated by those assets. As
the carrying amounts of these assets are dependent upon estimates of future
earnings that they are expected to generate, these assets may be impaired if
cash flows decrease significantly or do not meet expectations, in which case
they would be written down to their fair value. The estimates of useful lives
and expected cash flows require us to make significant judgments regarding
future periods that are subject to a number of factors, many of which may be
beyond our control. The Company determined that its long-lived assets were not
impaired as of December 31, 2022 and 2021. The Company recognized impairment
losses of $5.4 million during the year ended December 31, 2020 related primarily
to leasehold improvements and right-of-use assets associated with certain of
IT'SUGAR's retail locations. The recognition of these impairment losses
primarily resulted from the effects of the COVID-19 pandemic on the estimated
cash flows expected to be generated by the related assets. The Company's
property and equipment, operating lease assets and definite-lived intangible
asset balances were $35.1 million, $110.1 million and $29.4 million as of
December 31, 2022, respectively.



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