The St. Joe Company Adopts New Real Estate Investment Strategy | SoWal Forum - South Walton Florida
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buster

Beach Fanatic
Feb 19, 2006
283
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SoWal
The St. Joe Company (NYSE: JOE) (the "Company") today announced that the Company's Board of Directors has adopted a new real estate investment strategy, which is focused on reducing future capital outlays and employing new risk-adjusted investment return criteria for evaluating the Company's properties and future investments in such properties. Pursuant to this new strategy, the Company intends to significantly reduce planned future capital expenditures for infrastructure, amenities and master planned community development and reposition certain assets to encourage increased absorption of such properties in their respective markets. As part of this repositioning, the Company expects properties may be sold in bulk, in undeveloped parcels, or at lower price points. The Company anticipates that the amount of future capital expenditures associated with existing projects will be reduced by approximately $190 million, the majority of which was expected to be spent in the next 10 years. The Company believes that this new investment strategy continues to build upon the successful cost reduction initiatives previously implemented by the Company and positions the Company to (i) increase its short and medium-term cash flow, (ii) reduce its long-term risk and (iii) maintain the strong cash position necessary to weather a tepid and uncertain real estate environment and to best exploit the Company's substantial land resources.

As the Company stated in its November 3, 2011 press release, the new management team, led by Park Brady, who assumed the role of Chief Executive Officer on October 12, 2011 and Patrick Bienvenue, who joined the Company as its Executive Vice President in September 2011, commenced a review of all of the Company's assets and projects and the development of a new strategic plan to maximize the risk-adjusted return on the Company's real estate portfolio. The new strategy adopted by the Board of Directors is a product of that review. As a result, the Company has decided to modify the development plans for certain of its projects to bring them in line with the Company's new investment return criteria.

"In 2011, the new Board directed management to reduce expenses. We have met that goal and, as a result, we currently expect to have positive operating cash flow in 2012, excluding discretionary capital expenditures. The next request of our Board was the evaluation of our assets and development of a strategy to reduce future capital outlays and enhance the risk-adjusted return on investment while continuing to minimize potential risk to the Company in light of uncertain economic conditions. We believe that this new strategy will fulfill that request" said Park Brady.

The Company has made considerable progress in assessing the recoverability of specific properties under the new strategy, but has not yet completed the analysis. Based on the work performed to date, the Company currently anticipates it will record an aggregate non-cash charge for impairment associated with these projects that may range from $325 million to $375 million in the fourth quarter of its year ended December 31, 2011. The Company expects to finalize its estimates by the end of February.
 

Zebraspots

Beach Fanatic
May 15, 2008
840
247
Santa Rosa Beach
They are bleeding red ink and are trying to sell off anything they can and cut expenses anyway they can.
 

buster

Beach Fanatic
Feb 19, 2006
283
45
SoWal
Any more detail? Are they abandoning all projects they have developed? Fire saling what they own?
 

buster

Beach Fanatic
Feb 19, 2006
283
45
SoWal
Then that would mean there's nothing new.

However, this sounds like they are walking away from their developments (Watersound) and selling off any remaining lots however they can. So can we expect WaterSound's Origins golf course to become fields of weeds?
Pursuant to this new strategy, the Company intends to significantly reduce planned future capital expenditures for infrastructure, amenities and master planned community development and reposition certain assets to encourage increased absorption of such properties in their respective markets. As part of this repositioning, the Company expects properties may be sold in bulk, in undeveloped parcels, or at lower price points.

What the heck does the bold part mean?

Is this strategy a result of not being able to find anyone to buy the company?
 

Dawn

Beach Fanatic
Oct 16, 2008
922
369
Wall Stret Journal - Notice the last line about a deep southern feel and muggy climate. Really?!

St. Joe Co., one of largest landowners in Florida, signaled that it is scaling back development plans again, an indication that its efforts to turn the state's Northern Gulf Coast into a cluster of luxury second-home communities have been a flop.


On Friday, the company indicated in a Securities and Exchange Commission filing that it has adopted a "new real-estate investment strategy" that will see it reduce capital expenditures at its master planned communities. The firm said it also expects to sell undeveloped parcels in bulk at discounted prices.



The company expects to report a charge of between $325 million and $375 million for the fourth quarter of 2011, when earnings are released next month. That would amount to about one-fifth of the company's market capitalization and about half of the total real-estate assets on the company's balance sheet, which totaled $759.6 million at the end of September.


Friday's news was the latest in litany of convulsive changes at St. Joe, which has struggled since the housing bust and has had just one profitable quarter since 2008. Last spring, the company's largestshareholder, Miami-based mutual-fund manager Bruce Berkowitz, successfully ousted St. Joe's board in a proxy battle and installed himself as chairman. In March, he named Park Brady, the former chief executive of vacation-rental company ResortQuest, with a mandate to cut costs and return St. Joe to profitability.


In July, the WaterSound, Fla., company disclosed that the SEC was investigating the company's accounting practices for possible fraud and looking into whether Mr. Berkowitz filed the proper regulatory forms in acquiring a large portion of St. Joe's stock starting in 2008. That investigation remains unresolved. Mr. Berkowitz declined to comment through a representative.


The strategy shift also seems to validate some of the assertions made by St. Joe's critics, who have argued that the company is overvalued. In October 2010, David Einhorn, president of the hedge-fund firm Greenlight Capital Inc., publicly questioned the company's accounting practices at a popular investment conference, saying St. Joe had valued some of its land too high on its balance sheet.


Mr. Einhorn, who at the time had placed bets that St. Joe's stock would fall, suggested that the company should have written down the value of its assets by about two-thirds.


On Friday, Mr. Einhorn said in an emailed statement, "Today's news confirms our view that St. Joe's land is worth less than they thought and that it can't be developed profitably."


Mr. Einhorn retains a short, or bearish, position in St. Joe.

Although the housing market has been reeling for several years, St. Joe was slow to react, said Eric Landry, a Morningstar analyst who follows the firm.


"This new strategy confirms that the current management team feels more urgency toward attaining financial health than perhaps the old one did," he said. "They are saying, let's not build residential right now, until we spur some more economic development, because there's little demand for houses until they bring more jobs and commercial activity to the area."


St. Joe executives declined to elaborate on the SEC filing, saying the company is in a quiet period ahead of its earnings report.

People familiar with the company's plans, however, said that it will likely put on hold development at several of its most valuable resorts, possibly including WaterSound, a 1,400-acre group of coastal cottages sandwiched between a lake and the ocean, and WaterColor, a beach resort. Sales at both communities have been slow.
In the filing, the company said the strategy change would save $190 million in capital expenditures that would have been made over the next 10 years.


The company said it intends to continue to focus on commercial-real-estate development on the roughly 65 square miles of land the company owns around the Northwest Florida Beaches International Airport, which was built near West Bay on St. Joe land and opened in May 2011.


St. Joe had been a timber and railroad company for decades until the 1990s, when it spun off its industrial businesses to focus on real-estate development. It was convinced that its vast land holdings—it owns 577,000 acres, most of which is located in the Panhandle near Florida's white-sand beaches—were a gold mine for residential and commercial development. The company began developing luxury master-planned communities in the area, which is often derided for its deep southern feel and muggy climate.


From: Wall Street Journal, B-1, January 27th St. Joe Co., one of largest landowners in Florida, signaled that it is scaling back development plans again, an indication that its efforts to turn the state's Northern Gulf Coast into a cluster of luxury second-home communities have been a flop.


On Friday, the company indicated in a Securities and Exchange Commission filing that it has adopted a "new real-estate investment strategy" that will see it reduce capital expenditures at its master planned communities. The firm said it also expects to sell undeveloped parcels in bulk at discounted prices.



The company expects to report a charge of between $325 million and $375 million for the fourth quarter of 2011, when earnings are released next month. That would amount to about one-fifth of the company's market capitalization and about half of the total real-estate assets on the company's balance sheet, which totaled $759.6 million at the end of September.


Friday's news was the latest in litany of convulsive changes at St. Joe, which has struggled since the housing bust and has had just one profitable quarter since 2008. Last spring, the company's largestshareholder, Miami-based mutual-fund manager Bruce Berkowitz, successfully ousted St. Joe's board in a proxy battle and installed himself as chairman. In March, he named Park Brady, the former chief executive of vacation-rental company ResortQuest, with a mandate to cut costs and return St. Joe to profitability.


In July, the WaterSound, Fla., company disclosed that the SEC was investigating the company's accounting practices for possible fraud and looking into whether Mr. Berkowitz filed the proper regulatory forms in acquiring a large portion of St. Joe's stock starting in 2008. That investigation remains unresolved. Mr. Berkowitz declined to comment through a representative.


The strategy shift also seems to validate some of the assertions made by St. Joe's critics, who have argued that the company is overvalued. In October 2010, David Einhorn, president of the hedge-fund firm Greenlight Capital Inc., publicly questioned the company's accounting practices at a popular investment conference, saying St. Joe had valued some of its land too high on its balance sheet.


Mr. Einhorn, who at the time had placed bets that St. Joe's stock would fall, suggested that the company should have written down the value of its assets by about two-thirds.


On Friday, Mr. Einhorn said in an emailed statement, "Today's news confirms our view that St. Joe's land is worth less than they thought and that it can't be developed profitably."


Mr. Einhorn retains a short, or bearish, position in St. Joe.

Although the housing market has been reeling for several years, St. Joe was slow to react, said Eric Landry, a Morningstar analyst who follows the firm.


"This new strategy confirms that the current management team feels more urgency toward attaining financial health than perhaps the old one did," he said. "They are saying, let's not build residential right now, until we spur some more economic development, because there's little demand for houses until they bring more jobs and commercial activity to the area."


St. Joe executives declined to elaborate on the SEC filing, saying the company is in a quiet period ahead of its earnings report.

People familiar with the company's plans, however, said that it will likely put on hold development at several of its most valuable resorts, possibly including WaterSound, a 1,400-acre group of coastal cottages sandwiched between a lake and the ocean, and WaterColor, a beach resort. Sales at both communities have been slow.
In the filing, the company said the strategy change would save $190 million in capital expenditures that would have been made over the next 10 years.


The company said it intends to continue to focus on commercial-real-estate development on the roughly 65 square miles of land the company owns around the Northwest Florida Beaches International Airport, which was built near West Bay on St. Joe land and opened in May 2011.


St. Joe had been a timber and railroad company for decades until the 1990s, when it spun off its industrial businesses to focus on real-estate development. It was convinced that its vast land holdings—it owns 577,000 acres, most of which is located in the Panhandle near Florida's white-sand beaches—were a gold mine for residential and commercial development. The company began developing luxury master-planned communities in the area, which is often derided for its deep southern feel and muggy climate.


From: Wall Street Journal, B-1, January 27th
 

gmarc

Beach Fanatic
Jan 19, 2009
506
65
watercolor proabably won't be affected but watersound?

does st joe still own most of the vacant lots in watersound?if they dump those in bulk it could kill prices just as sowal comes off the bottom
 

Dawn

Beach Fanatic
Oct 16, 2008
922
369
Not sure but if they are bought by a bulk builder like happened in some other developments inSoWal there will be some nice homes at a nice price point in a nice development. Can't see how that is bad.
 
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