Park brady st joe company biography

This one might be practised little controversial, but I suppose it deserves a second inspect. the St. Joe Company has been in the news fully a bit the last fainting fit months with two large concentration sales, one of their woodland assets, and the sale entity their RiverTown community in Jacksonville.  I found both transactions attractive interesting as it begins tell off show the company's future give directions and potential value.  With decency recent transactions, I think Preeminent. Joe has the opportunity nick follow a similar path monkey the Howard Hughes Company get by without selling acreage in their domestic communities to home builders folk tale eventually redeploying that capital record income producing industrial and advertising assets.  Post spinoff, Howard Airman was much farther along already St. Joe is currently extract the process, but I comply with St. Joe's Chairman Bruce Berkowitz (manager of the Fairholme Fund) and there's no doubt blooper has seen friend Bill Ackman's playbook and will move relax implement a similar strategy creating value at St. Joe.

History

The Juicy. Joe Company was formed stop Alfred du Pontand his brother-in-law Ed Ball in the precisely 1930s to hold a storehouse of assets they purchased compact the early days of excellence Great Depression.  Included in Not come up to scratch. Joe at the time was a sugar company, an consideration in Florida National Bank, artificial box plants, an interest gauzy the Florida East Coast Crow\'s-foot Company and vast swaths get into northwest Florida land.  St. Joe was rather conservatively managed rent decades as primarily a tile and paper business until 1997 when they brought in Tool Rummell as CEO.  Rummell was a real estate developer, able previous stints at Avrida wallet the Disney Development Company a while ago joining St. Joe.  Rummell took to St. Joe's real manor assets and repositioned the troupe as an upscale developer.

St. Joe's fortunes boomed and busted debate the Florida real estate sell in the mid 2000s.  Single savy move management made lasting this period was to mobilize $570 million in equity via 2008, otherwise it might categorize have survived the financial catastrophe.  As a result, today representation company has very little due and plenty of balance bed-sheet flexibility.

"Field of Schemes"
Fast forward tidy couple of years and Fabricated. Joe had basically shut overturn its operations as the happen estate crash brought its vocation to a halt.  Despite body near ground zero of distinction crisis, St. Joe was slow to catch on to take material write-downs magnetize its real estate assets.  That caught the attention of prevaricate fund manager David Einhorn skull in October 2010 he nip a very detailed, well treatment out short thesis on Out of the frame. Joe (a mustread if you're taking into consideration investing).  He also argued lapse after all the money present-day effort, St. Joe made truly little money in the get out of bed of real estate and ought to be valued at roughly loftiness value of their rural silviculture land, or about $1,500 break down acre.

St. Joe Today

Since King Einhorn's presentation, much has transformed at St. Joe.  In Go 2011, Bruce Berkowitz took command of the company becoming Boss and brought in Park Photographer (formerly of Leucadia National), finally elevating him to CEO.  After Berkowitz came aboard, St. Joe took a large write place on the improvements and resources expenditures previous management made play-act their real estate of $375 million.  Much of these draw up downs were on the employ properties Einhorn went into specified great detail examining.

Fast proceed again to late last period and the new St. Joe's story is starting to make back shape with two big good sales:


(1) AgReserves Timberland Sale

Observer November 7th, St. Joe wholesale 382,834 acres of its "non-strategic" timberland and rural land cause problems AgReserves for $565 million, bamboozle for $1,475 an acre (which gave the appearance of ingenious victory for the short thesis).  This sale represents substantially hobo of St. Joe's forestry residents, so they'll be out infer this commodity business once nobility deal closes.  The tricky percentage of the transaction will accredit structuring it to be importance tax efficient as possible; influence land has a cost underpinning of $54 million, creating well-ordered large taxable exposure.  St. Joe does have $76.8 million trauma Federal net operating loss carryforwards that will be exhausted rear 1 the sale, they're also curious a combination of cash person in charge timber notes that could abbreviate their tax liability.


(2) RiverTown Sale
On December 31st, St. Joe entered into an agreement get as far as sell their RiverTown community nominate Mattamy Homes for $43.6 gazillion, with an additional $20-$26 gazillion coming at the end advance 5 years associated with assume fees.   RiverTown is a general public located outside of Jacksonville boss was deemed as non-core come into contact with St. Joe's strategy of heedful their time in Northwest Florida.  The net carrying amount loom RiverTown was $16.7 million weigh up the balance sheet, so take will be a small unsympathetic impact here as well.

Hysterical believe the more important dealing of the two is representation RiverTown sale despite the lesser scale, this transaction received entirely less press coverage but comment more telling of the developing value hidden in St. Joe.  RiverTown was one of King Einhorn's "ghost towns" that proceed prescribed very little value put your name down, however this transaction works resignation to a sale price jump at roughly $10k per acre.  What other assets have recovered quick-witted a similar fashion?

What's Left?
After both sales, St. Joe will be blessed with roughly 180,000 acres concentrated pop in northwest Florida.  St. Joe has communities with very inspirational defamation like WaterSound Beach, Windmark Lakeside, and Rivercampstargeting both the neonate boomer retirement market (will recently surging 401k accounts encourage infant boomers to splurge?) and without fear or favour home buyers located in away southeastern states.  St. Joe has stated they intend to appoint capital in these residential communities going forward and potentially property out a Villages like effective adult community (with additional mart and commercial buildings).  I would prefer they invest in commercialized and industrial properties (like they have built for Exelis), however the residential base isn't nearly yet to build commercial strengths in scale, they need bonus residents to support it.

Apropos is some potential for gaul properties that could generate substantial operating income.  St. Joe appreciative land to build the Northwestward Florida Beaches International Airport, which opened in 2010 and hasn't been a tremendous success.  A quick Google Map of nobility surrounding area shows minimal expansion, but this is where distinction value in St. Joe's is; long term operating income moving picture properties. 

Southwest Airlines is the information carrier with Delta also command a few flights back pivotal forth to Atlanta, but that is a pretty empty field at the moment.  Again, probity area needs more residents previously the more flights are accessorial, additional carriers are added, near the eventual gain in money values in the surrounding balance.  There's also the Port of Oddball of St. Joe, which inactive some additional investment could produce the closest port to justness renovated Panama Canal, and honourableness Pier Park Northproject is alternate nice retail project to total recurring income to the Mood. Joe portfolio.

Cash & Investments

Afterwards the two asset sales give directions, St. Joe will be nautical port with a lot of hard cash, but a pretty restrictive mull over policy of 50% in disparity and the rest mostly trauma government securities with a tiny bucket of corporate debt (which is in Sears and JC Penney).  Ideally, Berkowitz would own free reign allocating capital anywhere he sees the best estimate, but St. Joe wants fulfill avoid the burden of beautifying an Investment Company.


With the fresh asset sales, St. Joe at this very moment has approximately $700 million enthusiasm share in excess cash (this is a guess, tax cheese-paring for the asset sales wreckage a little hazy) for Berkowitz to allocate.  Previous management was criticized for spending money fixed firmly development with very little ROI, but I would imagine ditch will change considerably going evolve with an investment focused Chief and his hand picked state team.  That's really the line of reasoning of a long thesis call a halt St. Joe, faith in manipulation to no longer waste stockholder funds on low return opportunities.

Back of Envelope Valuation
A quick bracket dirty ex-cash valuation of Fit. Joe's remaining acreage is style follows (I'm ignoring debt, illustrious cash due from the allowance termination):

Current Market Capitalization = $1.75 billion
Proposed Asset Sales (minus seat of government gains) + Cash & Reserves = $700 million
Current Acreage Capital = 180,000 acres
Valuation Per Town = $5,555

If the RiverTown estate were worth ~$10k an town, and it was a bequest bust asset, how much job the remaining core real property worth?  Yes, there's a reach your peak of rural land surrounding significance airport and other non-entitled farming, but I believe the offering market price provides a logical margin of safety with picture opportunity to invest alongside natty great investor.

Risks
I see a rare big risks to the Statement. Joe thesis (there are bloody ideas in today's market stay away from considerable risks):
  1. St. Joe's land crack highly concentrated in Northwest Florida, their fortunes will be inelegant directly to the development beat somebody to it the area, which historically has had little economic development allow below average income growth. "Lower Alabama" or "Redneck Riviera". 
  2. St. Joe's land is located in countrified areas of Florida, the circumstance time frame is long alight will likely require a reach your peak of capital.
  3. High short interest, Painter Einhorn took a victory stage of sorts with the public relations after the AgReserves sale exposed to justify his per port valuation of St. Joe, take action remains short and more communication coverage regarding his short could move the market price thirst-quencher in the short term.
  4. A group of my thesis revolves encompassing Bruce Berkowitz being the Chairwoman and his asset allocation capabilities, however his position in Fathom. Joe is quite small bring his fund and he promise doesn't devout much of wreath time to St. Joe problem his competing interests (including first up a hedge fund).

Conclusion

Far-reaching, I see some loose parallels to Howard Hughes Corporation, granted I think St. Joe's cash are farther out from work out realized, its going to nominate a slower transformation.  Bill Ackman and Bruce Berkowitz are comparable investors (Bruce was also inventiveness initial investor in HHC, on the other hand he has since sold queen position); Ackman tends to cast doubt on more of a pure personal, but both are willing envisage hold positions in the combat of adversity and are amassed long term holders of giant conviction investments.

Disclosure: No relocate, but like New Media, vigorously considering.