Cil
Beach Fanatic
The first round of lay-offs already took place about a month ago.
StJoe (JOE) Shocks-takes charge, exits Florida bldg.
- Thread starter GaltsGulch
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When I turned on the TV this morning, CNBC was just finishing up a story on St Joe that I missed. I knew if I logged on here that you guys would have it covered ... and boy on boy, what a story
.
Maybe there is a silver lining ... if Joe isn't plowing tons of new houses onto the market, maybe the backlog of inventory in South Walton can be worked off faster(?)
Although, yesterday, as each of the builders, one by one, downgraded their expectations for the year, they all pointed to deteriorating consumer sentiment. So now in SoWal we have the big player saying that the market now bites SO BAD, that he is getting out of the business entirely. So in addition to deteriorating buyer sentiment, SoWal now has to deal with deteriorating builder sentiment ... which could lead to deteriorating seller sentiment (which until now, appears to have held up remarkably well) ... and so the spiral begins.
.Maybe there is a silver lining ... if Joe isn't plowing tons of new houses onto the market, maybe the backlog of inventory in South Walton can be worked off faster(?)
Although, yesterday, as each of the builders, one by one, downgraded their expectations for the year, they all pointed to deteriorating consumer sentiment. So now in SoWal we have the big player saying that the market now bites SO BAD, that he is getting out of the business entirely. So in addition to deteriorating buyer sentiment, SoWal now has to deal with deteriorating builder sentiment ... which could lead to deteriorating seller sentiment (which until now, appears to have held up remarkably well) ... and so the spiral begins.
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There is more info on the JOE website than in the press release ... its not as bad as it originally sounded in the above release (more of a change in focus rather than an "exit" -- although clearly, lots of folks will be losing their jobs) ... here it is ...
Thursday, September 7, 2006
Jacksonville, Florida – (September 7, 2006) – The St. Joe Company (NYSE: JOE) announced today that it intends to exit Florida homebuilding as the company sharpens its focus on strategies expected to maximize the value of its core land holdings. The move will result in a workforce reduction and is made possible by JOE's expanding relationships with local, regional and national homebuilders.
In connection with this plan, JOE expects to take a charge to earnings of approximately $10.7 million. This charge consists of approximately $2.3 million for one-time, cash termination benefits to employees and approximately $8.4 million of non-cash charges related to the write-off of capitalized homebuilding costs at several communities. Approximately $9.0 million of these charges will be recognized in the third quarter of 2006.
"During the past ten years we have seeded our key markets with financially successful, critically acclaimed places," said JOE chairman and CEO Peter S. Rummell. "Both JOE - and the markets where we do business - have matured to the point where it makes sense for us to further tighten our focus. We will focus those efforts where our competitive advantages are strongest and value creation potential is highest."
"Maximizing value for JOE means doing all the things it takes to move land to higher and better uses by preparing it to support inspirational places, towns, resorts and rural settings," said Rummell. "We are a 'town builder' not a 'home builder.' We want to use JOE's unique strengths to stimulate the creation of the infrastructure, workplaces, neighborhoods and environments that endow places with value, personality and purpose."
JOE will honor all its existing homebuilding contracts and new home warranties. "We are winding down our internal homebuilding operations, not walking away from our customers or commitments," said Rummell. "Moving forward, we will focus on what we do best: Creating great places."
"JOE's expanding relationships with local, regional and national homebuilders have made this move possible," said Rummell. "We had anticipated being able to make this strategic shift once we had proven the viability of our markets, particularly in Northwest Florida, and we are pleased this opportunity has come as quickly as it has."
Earlier this year, JOE announced a long-term relationship with Beazer Homes, USA (NYSE: BZH). Additionally, JOE's relationship with David Weekly Homes has expanded over the past year. Conversations with other homebuilders are ongoing. Nineteen local, regional and national homebuilders have submitted letters of interest to participate in JOE's RiverTown development south of Jacksonville.
Additional information regarding JOE's exit from Florida homebuilding can be found in an 8-K to be filed with the U.S. Securities and Exchange Commission today.
Thursday, September 7, 2006
The St. Joe Company (NYSE: Joe) To Exit Florida Homebuilding As It Sharpens Focus On Value Creation
The Move Comes as JOE Expands its Relationships with Local, Regional and National Builders
Jacksonville, Florida – (September 7, 2006) – The St. Joe Company (NYSE: JOE) announced today that it intends to exit Florida homebuilding as the company sharpens its focus on strategies expected to maximize the value of its core land holdings. The move will result in a workforce reduction and is made possible by JOE's expanding relationships with local, regional and national homebuilders.
In connection with this plan, JOE expects to take a charge to earnings of approximately $10.7 million. This charge consists of approximately $2.3 million for one-time, cash termination benefits to employees and approximately $8.4 million of non-cash charges related to the write-off of capitalized homebuilding costs at several communities. Approximately $9.0 million of these charges will be recognized in the third quarter of 2006.
"During the past ten years we have seeded our key markets with financially successful, critically acclaimed places," said JOE chairman and CEO Peter S. Rummell. "Both JOE - and the markets where we do business - have matured to the point where it makes sense for us to further tighten our focus. We will focus those efforts where our competitive advantages are strongest and value creation potential is highest."
"Maximizing value for JOE means doing all the things it takes to move land to higher and better uses by preparing it to support inspirational places, towns, resorts and rural settings," said Rummell. "We are a 'town builder' not a 'home builder.' We want to use JOE's unique strengths to stimulate the creation of the infrastructure, workplaces, neighborhoods and environments that endow places with value, personality and purpose."
JOE will honor all its existing homebuilding contracts and new home warranties. "We are winding down our internal homebuilding operations, not walking away from our customers or commitments," said Rummell. "Moving forward, we will focus on what we do best: Creating great places."
"JOE's expanding relationships with local, regional and national homebuilders have made this move possible," said Rummell. "We had anticipated being able to make this strategic shift once we had proven the viability of our markets, particularly in Northwest Florida, and we are pleased this opportunity has come as quickly as it has."
Earlier this year, JOE announced a long-term relationship with Beazer Homes, USA (NYSE: BZH). Additionally, JOE's relationship with David Weekly Homes has expanded over the past year. Conversations with other homebuilders are ongoing. Nineteen local, regional and national homebuilders have submitted letters of interest to participate in JOE's RiverTown development south of Jacksonville.
Additional information regarding JOE's exit from Florida homebuilding can be found in an 8-K to be filed with the U.S. Securities and Exchange Commission today.
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What this says to me is St. Joe doesn't want to build spec houses, and will hire contractors to build multi-family and facilities, which they have done often already.
As someone who has been associated with Arvida/St. Joe for some time, I am disappointed in this latest news, but I am far from shocked. They have been rearranging deck chairs on the Titantic for the past 3 years as it relates to their homebuilding efforts. Their management has turned over in this area on a yearly basis, their vendors and sub-contractors have been loyal, but not very aggressive in pricing due to the pain in the ass factor that was related to working for a company that failed to run their jobs in a manner that was conducive to scheduling, which is key for anyone in the construction industry. They were the golden child of the company for a while, because their profits appeared astronomical with their low basis in the land.
From day one I asked myself the question, why expose yourself to the liability and fluctuating costs of homebuilding when you have the golden goose.
Their focus is going to be one of Town Building which, other than the fiasco that is River Camps, is where their most profitible opportunity lies. I know that they have spent a ton on amenities and infrastructure, but their basis in raw land is pennies per acre, it allows them a great deal of latitude in spending money on building a town.
I wish all the people being laid off the best of luck, and hope they find other opportunities in this area. This may be a challenge due to the overall slow down in the area though.
From day one I asked myself the question, why expose yourself to the liability and fluctuating costs of homebuilding when you have the golden goose.
Their focus is going to be one of Town Building which, other than the fiasco that is River Camps, is where their most profitible opportunity lies. I know that they have spent a ton on amenities and infrastructure, but their basis in raw land is pennies per acre, it allows them a great deal of latitude in spending money on building a town.
I wish all the people being laid off the best of luck, and hope they find other opportunities in this area. This may be a challenge due to the overall slow down in the area though.
That is the way I read this as well. I agree with the other person that knows JOE well that they are just retrenching back into their "core" business and that is land/town development and not in building houses. No doubt JOE and many other development/builders (CENTEX, Ryland, others) are starting to rethink their development and building strategies if you read the papers.
Exactly! St Joe does not need to build any more homes. Their work is some of the worst I have ever seen. The condo's in WC are already in dire need of paint and replacement of the trim. Look at the houses next to Publix that they are building..terrible craftsmanship. In my opinion it is a positive for the developments if they no longer build.
I must disagree with you Franny. We have a unit at WC and have found it to be very well built. As for the paint, how long does paint last down there?
