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By Lawrence C. Strauss |
Published: April 28, 2008
REAL ESTATE AND Florida have been a toxic combination for the past three years. So it's no surprise that shares of St. Joe, a land developer based in Jacksonville, have taken a big hit. After peaking in the mid-80s nearly three years ago, they headed south as soon as the Sunshine State's realty market fell apart. At around 40 last week, the stock had lost more than half its value since mid-2005.
The bear case on the stock, which has had considerable short interest, is that the state's depressed real-estate market won't recover at least until 2010.
But some prominent value investors, including Third Avenue Management, have taken big stakes in St. Joe, which, they argue, is well positioned to rebound once the market turns. A recent stock offering, which netted the company $580 million, was dilutive to existing shareholders but let St. Joe wipe out its debt, erasing any concerns about its liquidity. The company also eliminated its dividend and said that it would buy back shares when it viewed this as appropriate.
Just as a matter of note, Baron's recommended St Joes's Paper last weekend. I've thought seriously about taking a flyer on the stock. The article talked about them having ramped down the development side of the business. They are now simply selling real estate. As an investment now, it's a hard call. Florida has taken quite a real estate hit. Given the tightened lending standards and inventory that still needs to clear, you probably have the luxury of time on this one. I am by no means an expert stock picker nor have any special information on St. Joe's but I would suspect that given the real estate picture, you may want to wait 12 months on this one before pulling the trigger.
Check out the trees and the nature left by the St Joe company in these photos of one of their developments called Watersound. This development includes 1 mile of beach and 256 acres bordered by a state park on one side. Though many people may have a difficult time with development in general, we have to say that at least St Joe is conscientious when it comes to leaving some of the natural beauty of the property. Every St Joe property we've been in has wonderful green spaces, pathways and trails that wind through the natural beauty of the land, their beach developments are built back from the gulf so as not to disturb the natural protection and beauty of the dunes. They do leave a lot of the natural surroundings --- keep in mind that they don't have to. So many developers just come in and clear cut the property, leaving no trees, no parks, no pathways and building right on top of the dune with cookie cutter homes. We are grateful for the nature that they leave to enjoy -- as that's what brings people to our little paradise. And no, we don't work for St Joe, it's just that every time we are in one of their communities -- we can't help but think they are some of the most beautiful and well-thought out developments around. Here is a taste of what they do:
Just as a matter of note, Baron's recommended St Joes's Paper last weekend. I've thought seriously about taking a flyer on the stock. The article talked about them having ramped down the development side of the business. They are now simply selling real estate. As an investment now, it's a hard call. Florida has taken quite a real estate hit. Given the tightened lending standards and inventory that still needs to clear, you probably have the luxury of time on this one. I am by no means an expert stock picker nor have any special information on St. Joe's but I would suspect that given the real estate picture, you may want to wait 12 months on this one before pulling the trigger.
In our area of Florida, the St Joe properties, more specifically Watercolor & Watersound have faired better than others in this current real estate market. The prices have come down significantly and folks who have always wanted to live here or missed the boat the last time it boomed, are buying again. They are not buying to flip -- but rather as 2nd vacation homes or to live. The St Joe properties are priced very competitively compared to other developments, that in our opinion, don't offer what their properties do. It seems like there has been more activity in the market locally -- no, it may not be the bottom but here is a good example: a house in our neighborhood which is 6 blocks up from the beach, was recently listed for $275,000 (not a bad deal for our beach), the kicker is that it sold for $150,000 ..... so, some people rather than trying to predict the bottom are just coming in and making a low offer and seeing what happens ....
Back to St Joe, we think, and it's just our opinion, that they will always be a good investment --- they've taken very smart steps through this real estate meltdown so they could stay in the game once the market cycles back .... their properties are beautiful and they own a lot of land .... they don't appear to be a company that is going away anytime soon .......
Just curious ..... have you ever been in a St Joe development?
No, unfortunately. I just cannot understand why that area needs to be developed when there is no economic engine to support development. The last time I was up that way was in the late 80's. I liked it then just like most parts of Florida that were not developed. Leaving the native scenery sure adds to the appeal of the properties, but don't you think that Florida is full of people as it is?
...but don't you think that Florida is full of people as it is?
People are coming to Florida anyway, Tallrick. There is global population growth, plain and simple, and people have to live somewhere.
It's not just Florida, the planet is getting more crowded !
So, development will happen. It should not happen everywhere, and it should be well-thought out with great attention to the environmental impact, and it should be city-centric development...and that's a big key right there, I think.
Especially here in the South, and Jacksonville is a perfect example of this, many Downtown cities were all but abandoned in the 60's and 70's. Many of them are slowly being re-imagined, but cities should really entice developers to re-develop downtowns. Make downtowns so attractive that people will want to live/work/play there and save some of the natural beauty of Florida for all of us to share, not just the elite few.
Pack 'em in the cities and leave the beaches alone!
St. Joe's does a beautiful job, and they do some urban development as well. Here is a project of St. Joe's in Jacksonville about 2 miles south of our downtown core:
East San Marco - Luxury Condos in Jacksonville Florida | The St. Joe Company (http://www.joe.com/web/TownsAndHomes/EastSanMarco/EastSanMarcoLanding.html - broken link)
Sadly, it is on hold right now , but ground has been broken and word is they will move forward with it in the near future...let's hope so.
No, unfortunately. I just cannot understand why that area needs to be developed when there is no economic engine to support development. The last time I was up that way was in the late 80's. I liked it then just like most parts of Florida that were not developed. Leaving the native scenery sure adds to the appeal of the properties, but don't you think that Florida is full of people as it is?
We understand that sometimes it is difficult to watch a place that you've known in one way be developed into something else. One of us 2bohemians lived in this area back many years ago when there wasn't much of anything out here but beautiful dunes and glorious beaches. It was only a matter of time before people discovered this place --- it was inevitable that the development would happen and yes, it can be hard to watch groves of trees be taken down.
But we are very lucky along our little stretch of beaches called the Scenic Highway 30A --- we have rules --- no more than 50 feet height restrictions (prevents the giant condos from taking over the beach), we have sign ordinances (no billboards allowed), no chain restaurants (we support our local businesses). In fact, just recently the TDC put up these signs along our scenic road that were very industrial / Disney looking --- they were giant, varying sizes, and screaming bright blue --- the local community was in an uproar about it demanding that they be removed because they didn't fit the character, beauty and quaintness of our special stretch of beaches. The power of the people was illustrated here --- the TDC wanted to plant plants around them or paint them a different color but the residents wouldn't settle for anything less than removal. And after much publicity and some determined locals, the signs have now been removed.
Not everyone that comes to Florida is seeking commerce or economic development --- some folks come here for retirement and others because they recognize the beauty of our beaches. As many tourists have long recognized, Walton County is a great place to visit or to live. With community enhancements , such as new schools, a new hospital, new recreational opportunities--coupled with the County's great natural beauty and other quality of life issues make this a very desirable place to live. As the trend continues toward placing a higher priority on life satisfaction, business owners in a position to locate or relocate their businesses will choose a place they want to live in.
The International Airport that has broken ground on the West Bay will be the first major airport built in the US in over 30 years. The last one was Fort Meyers, Florida and that area was "smaller" geographically and "much smaller" in terms of residents in the area than us. This will be a major job producer and will turn our Tourism industry inside-out as only 2.4% of our current vacationers are international compared to over 35% for Fort Meyers. This will literally make us a "world class" destination.
The largest military base in the US is in Okaloosa county (just west of us) and only 15 minutes to the West of Freeport on Hwy 20. There are an estimated 12-15,000 new military and civilian jobs coming to Eglin Air Force Base.
Tallrick, we could go on an on but we are thinking that since you haven't been up this way since the 80's, why not take a drive and give us a visit. So much has changed since then --- you may not even recognize this place. If you do venture up our way, we would love to show you some of the St Joe properties first hand and then have you give us an honest opinion as compared to others developments.
People will always be attracted to sunshine and coastal towns -- like it or not -- it's just the way it is. However, there are still plenty of places across this great big beautiful country that we live in, that you can go and rarely see another person.
People are coming to Florida anyway, Tallrick. There is global population growth, plain and simple, and people have to live somewhere.
It's not just Florida, the planet is getting more crowded !
So, development will happen. It should not happen everywhere, and it should be well-thought out with great attention to the environmental impact, and it should be city-centric development...and that's a big key right there, I think.
Especially here in the South, and Jacksonville is a perfect example of this, many Downtown cities were all but abandoned in the 60's and 70's. Many of them are slowly being re-imagined, but cities should really entice developers to re-develop downtowns. Make downtowns so attractive that people will want to live/work/play there and save some of the natural beauty of Florida for all of us to share, not just the elite few.
Pack 'em in the cities and leave the beaches alone!
St. Joe's does a beautiful job, and they do some urban development as well. Here is a project of St. Joe's in Jacksonville about 2 miles south of our downtown core:
East San Marco - Luxury Condos in Jacksonville Florida | The St. Joe Company (http://www.joe.com/web/TownsAndHomes/EastSanMarco/EastSanMarcoLanding.html - broken link)
Sadly, it is on hold right now , but ground has been broken and word is they will move forward with it in the near future...let's hope so.
Riveree, Thanks for your input and for sharing the info about East San Marco --- we hadn't heard of those yet --- we would love to visit some more St Joe properties in other parts of Florida --- simply because we've really enjoyed all the ones that are in our area.
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, but ground has been broken and word is they will move forward with it in the near future...let's hope so.
