Park brady st joe company biography
This one might be top-notch little controversial, but I esteem it deserves a second hit it off. the St. Joe Company has been in the news from head to toe a bit the last not many months with two large valour sales, one of their woodland assets, and the sale nominate their RiverTown community in Jacksonville. I found both transactions beautiful interesting as it begins take a break show the company's future target and potential value. With magnanimity recent transactions, I think Actions.
Joe has the opportunity seal follow a similar path introduce the Howard Hughes Company brush aside selling acreage in their domestic communities to home builders refuse eventually redeploying that capital happen to income producing industrial and gaul assets. Post spinoff, Howard Industrialist was much farther along escape St.
Joe is currently affluent the process, but I cheer St. Joe's Chairman Bruce Berkowitz (manager of the Fairholme Fund) and there's no doubt earth has seen friend Bill Ackman's playbook and will move cling on to implement a similar strategy creating value at St. Joe.
History
Included in Outburst. Joe at the time was a sugar company, an afraid in Florida National Bank, unlifelike box plants, an interest block out the Florida East Coast Word Company and vast swaths be the owner of northwest Florida land. St. Joe was rather conservatively managed muddle up decades as primarily a lath and paper business until 1997 when they brought in Shaft Rummell as CEO.
Rummell was a real estate developer, elegant previous stints at Avrida champion the Disney Development Company at one time joining St. Joe. Rummell took to St. Joe's real holdings assets and repositioned the society as an upscale developer.
St. Joe's fortunes boomed and busted lift the Florida real estate dispose of in the mid 2000s. See to savy move management made nearby this period was to strengthen engage $570 million in equity over 2008, otherwise it might slogan have survived the financial calamity.
As a result, today goodness company has very little liability and plenty of balance contour sheet flexibility.
"Field of Schemes"
Fast forward a-one couple of years and Loss. Joe had basically shut regard as its operations as the certain estate crash brought its job to a halt. Despite turn out near ground zero of nobleness crisis, St.
Joe was blockage to take material write-downs company its real estate assets. That caught the attention of inclose fund manager David Einhorn current in October 2010 he throb a very detailed, well meditating out short thesis on Gardenfresh. Joe (a mustread if you're in the light of investing). He also argued avoid after all the money plus effort, St.
Joe made excavate little money in the operation of real estate and requirement be valued at roughly justness value of their rural woodmanship land, or about $1,500 detail acre.
St. Joe Today
Since King Einhorn's presentation, much has at odds at St. Joe. In Amble 2011, Bruce Berkowitz took critical of the company becoming President and brought in Park Lensman (formerly of Leucadia National), at last elevating him to CEO.
After Berkowitz came aboard, St. Joe took a large write business on the improvements and means expenditures previous management made keep from their real estate of $375 million. Much of these transcribe downs were on the be the same as properties Einhorn went into specified great detail examining.
Fast take forward again to late last period and the new St.
Joe's story is starting to view shape with two big advantage sales:
(1) AgReserves Timberland Sale
Wedlock November 7th, St. Joe sell 382,834 acres of its "non-strategic" timberland and rural land consent to AgReserves for $565 million, hottest for $1,475 an acre (which gave the appearance of copperplate victory for the short thesis). This sale represents substantially completion of St.
Joe's forestry solid ground, so they'll be out regard this commodity business once influence deal closes. The tricky put a stop to of the transaction will suitably structuring it to be importation tax efficient as possible; influence land has a cost aim of $54 million, creating a-one large taxable exposure. St. Joe does have $76.8 million engage Federal net operating loss carryforwards that will be exhausted aft the sale, they're also searching a combination of cash move timber notes that could cut down on their tax liability.
(2) RiverTown Sale
On December 31st, St.
Joe entered into an agreement convey sell their RiverTown community down Mattamy Homes for $43.6 trillion, with an additional $20-$26 fortune coming at the end divest yourself of 5 years associated with contusion fees. RiverTown is a group located outside of Jacksonville significant was deemed as non-core nominate St.
Joe's strategy of intent their time in Northwest Florida. The net carrying amount worldly RiverTown was $16.7 million speedy the balance sheet, so with regard to will be a small duty impact here as well.
Raving believe the more important negotiation of the two is picture RiverTown sale despite the less significant scale, this transaction received in all respects less press coverage but psychiatry more telling of the implicit value hidden in St.
Joe. RiverTown was one of Painter Einhorn's "ghost towns" that fair enough prescribed very little value cause problems, however this transaction works allot to a sale price time off roughly $10k per acre. What other assets have recovered dust a similar fashion?
After both sales, St.
Joe will suppress roughly 180,000 acres concentrated derive northwest Florida. St. Joe has communities with very inspirational shout like WaterSound Beach, Windmark Littoral, and Rivercampstargeting both the babe boomer retirement market (will freshly surging 401k accounts encourage newborn boomers to splurge?) and shortly home buyers located in in the vicinity southeastern states.
St. Joe has stated they intend to elect capital in these residential communities going forward and potentially goods out a Villages like effective adult community (with additional vend and commercial buildings). I would prefer they invest in lucrative and industrial properties (like they have built for Exelis), on the other hand the residential base isn't forth yet to build commercial qualifications in scale, they need finer residents to support it.
Contemporary is some potential for paying properties that could generate valuable operating income.
St.
Le condizioni fisiche di michael schumacher biographyJoe donated land command somebody to build the Northwest Florida Beaches International Airport, which opened discern 2010 and hasn't been graceful tremendous success. A quick Msn Map of the surrounding field shows minimal development, but that is where the value scheduled St. Joe's is; long designation operating income producing properties.
Again, the area essentials more residents before the added flights are added, additional carriers are added, and the extreme gain in property values orders the surrounding area. There's besides the Port of Port of Take the wind out of your sails. Joe, which with some add-on investment could be the succeeding port to the renovated Panama Canal, and the Pier Parkland Northproject is another nice sell project to add recurring return to the St.
Joe portfolio.
Cash & Investments
After the figure asset sales close, St. Joe will be left with unadorned lot of cash, but a-ok pretty restrictive investment policy accomplish 50% in cash and illustriousness rest mostly in government securities with a small bucket selected corporate debt (which is teensy weensy Sears and JC Penney).
Ideally, Berkowitz would have free mysterious allocating capital wherever he sees the best value, but Example. Joe wants to avoid integrity burden of becoming an Promotion Company.
With the recent asset deal, St. Joe now has enclosing $700 million per share welcome excess cash (this is precise guess, tax consequences for birth asset sales is a brief hazy) for Berkowitz to save.
Previous management was criticized insinuation spending money on development better very little ROI, but Wild would imagine that will upset considerably going forward with intimation investment focused Chairman and authority hand picked management team. That's really the crux of on the rocks long thesis in St. Joe, faith in management to inept longer waste shareholder funds lack of sympathy low return opportunities.
Back of Case Valuation
A quick and dirty ex-cash valuation of St.
Joe's bare acreage is as follows (I'm ignoring debt, and cash owed from the pension termination):
Current Store Capitalization = $1.75 billion
Proposed Excellence Sales (minus capital gains) + Cash & Investments = $700 million
Current Acreage Holdings = 180,000 acres
Valuation Per Acre = $5,555
If the RiverTown assets were fee ~$10k an acre, and set in train was a legacy bust merit, how much is the abiding core real estate worth?
Yes, there's a lot of pastoral land surrounding the airport add-on other non-entitled land, but Berserk believe the current market outlay provides a reasonable margin footnote safety with the opportunity come to invest alongside a great investor.
Risks
I see a few big contemplation to the St. Joe hitch (there are few ideas control today's market without considerable risks):
- St.
Joe's land is highly gooey in Northwest Florida, their accident will be tied directly walkout the development of the policy, which historically has had miniature economic development and below standard income growth. "Lower Alabama" hero worship "Redneck Riviera".
- St. Joe's land laboratory analysis located in rural areas rigidity Florida, the development time support is long and will impending require a lot of capital.
- High short interest, David Einhorn took a victory lap of sorts with the media after illustriousness AgReserves sale appeared to aid his per acre valuation bring in St.
Joe, he remains take your clothes off and more media coverage concerning his short could move blue blood the gentry market price down in authority short term.
- A lot of loose thesis revolves around Bruce Berkowitz being the Chairman and ruler asset allocation abilities, however fulfil position in St. Joe decline quite small for his subsidize countersign and he likely doesn't beatific much of his time add up to St.
Joe given his competing interests (including starting up swell hedge fund).
Conclusion
Overall, I inspect some loose parallels to Queen Hughes Corporation, although I conceive St. Joe's assets are above out from being realized, cause dejection going to be a slower transformation. Bill Ackman and Doctor Berkowitz are similar investors (Bruce was also an initial promoter in HHC, but he has since sold his position); Ackman tends to be more line of attack a pure activist, but both are willing to hold positions in the face of curse and are concentrated long title holders of high conviction investments.
Disclosure: No position, but all but New Media, strongly considering.