How is Florida's 2nd Largest Land Owner Doing? Revisiting The St. Joe Company as a Predictor for Florida Commercial Real Market in 2013 and Beyond


Floridians recognized the name "St. Joe" and with good reason: this Jacksonville company is the second largest land owner in the State of Florida, owning approximately 567,000 acres as of a tally last month.

We've posted about St. Joe Company periodically (check out past posts here). As we enter into the new year, can we glean something about how Florida real estate industry will fare by pondering what is going on with St. Joe? Maybe.

First, it's important to note that St. Joe isn't just a land owner here in Florida, St. Joe is a land developer. From their web site:

The St. Joe Company is one of Florida's largest real estate development companies and Northwest Florida's largest private landowner with approximately 567,000 acres of land, concentrated primarily between Tallahassee and Destin. St. Joe is helping bring high-quality, strategic growth to the last, best part of Florida.Our vast land holdings include over 300,000 acres within 40 miles of the new Northwest Florida Beaches International Airport.

Our land and natural assets combined with our strategic vision for Northwest Florida are helping us create long-term value for our shareholders. We develop resort and residential communities for those who want to live, work and play near the region's beautiful white sand beaches. Our commercial and industrial developments are helping bring jobs and economic growth to the region. In addition, the company manages timber operations on thousands of acres and offers certain rural acreage for sale. We believe that the future of Florida is bright and The St. Joe Company will have a key role in Northwest Florida's growth for many years to come.

What Investors Are Thinking About St. Joe Company These Days

1. Zacks recently announced that St. Joe was its "bull of the day," for things like:

  • The St. Joe Company reported strong third quarter 2012 results
  • St. Joe had a "healthy year-over-year increase in revenue"
  • St. Joe had a healthy EPS that exceeded the Zacks Consensus Estimate by $0.18.
  • St. Joe is working on development of the area next to the Panama-City Bay County Airport

Their bottom line take on things: "Our long-term Outperform recommendation on the stock indicates that it would perform well above the broader market. Our target price of $27.00, 158.8X 2012 EPS, factors in this view."

2. Interactive Buyside Reports on St. Joe

Interactive Buyside ("IB") is a group of independent economic analysts that provide research reports to individual investors. For details out IB's work, check out its website.

In a recent online report, this independent analyst also sees an optimistic future for Florida's St. Joe:

"The St. Joe Company ("JOE") is a real estate development company in Northwest Florida whose operations had been hit hard in the 2008 downturn. JOE's stock price has recovered from its mid-teen lows it saw in early and mid 2012, as housing has experienced a broad recovery over the past 6 months throughout the U.S. and specifically Florida. Despite the stock's run-up to $22/share, JOE's overhyped asset base consists of secluded rural land in Northwest FL, undeveloped residential lots in vacant communities, and primarily empty commercial acreage that is dependent on the success of a relocated Panama City airport. As detailed in this report, we believe the market is currently baking in best case scenario, as the current stock price is not being justified even after assuming a relatively aggressive asset valuation of JOE's real estate holdings."

So, What Does St. Joe's Company Say For Itself?

The company recently issued a press release that provided its Results for the Third Quarter of 2012. From that release, the following information was provided to the public:

  1. The number of residential units sold increased from 40 units in the third quarter of last year to 58 units in the third quarter of this year. Pricing also improved, particularly in our resort communities where we have experienced an increase in demand. The combination of higher pricing and a greater number of units sold contributed to a revenue increase of 146% in residential real estate sales.
  2. Real estate sales in the Company's rural land businesses was positively and significantly impacted by the sale of two non-strategic pieces of property totaling 3,240 acres at an average price of $5,655 per acre, or $18.3 million in total.
  3. Tons of timber sold increased approximately 13% quarter over quarter as a result of opening more of our acreage to timber harvesting and the positive impact of our investments in technology and infrastructure.
  4. Revenue in the Company's resorts and clubs business grew approximately 9% in the third quarter of 2012 compared to the third quarter of 2011 due to a strong summer vacation season.
  5. Two new commercial tenants, one in the Port of Port St Joe and one in Venture Crossings, commenced their leases.
  6. The Company prepaid $19.3 million of debt at its RiverTown project related to infrastructure and community improvement projects. By prepaying the debt, the Company will save approximately $6.0 million in interest expense over the next four and a half years.

Park Brady, St. Joe's Chief Executive Officer, said:

"We had a good third quarter fueled by improvements in all of our business lines. The rural land sales were opportunistic sales of property that were not strategic to our business focus. Despite a slow economy, our residential development, resorts and timber businesses all showed improvement compared to last year. We prepaid over $19 million of debt at one of our residential projects, and we still have $172 million of cash and cash equivalents, which is slightly more than last quarter. We will continue to seek market opportunities in our resort and primary home communities while also exploring longer term opportunities that take advantage of changing demographics, such as retirement communities."

For those looking to find footholds in the current economy that mark Florida's economy and particularly Florida's commercial real estate marketplace as bouncing back from the Great Recession, it appears that St. Joe Company is providing that traction. More incentive to be optimistic about Florida's future in 2013 and beyond.



DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Rosa Eckstein Schechter, Eckstein Schechter Law | Attorney Advertising

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