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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) April 20, 2004
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The St. Joe Company
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(Exact Name of Registrant as Specified in Its Charter)
Florida
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(State or Other Jurisdiction of Incorporation)
1-10466 59-0432511
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(Commission File Number) (IRS Employer Identification No.)
245 Riverside Avenue, Suite 500, Jacksonville, FL 32202
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(Address of Principal Executive Offices) (Zip Code)
(904) 301-4200
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(Registrant's Telephone Number, Including Area Code)
N/A
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(Former Name or Former Address, if Changed Since Last Report)
ITEM 12. Results of Operations and Financial Condition
---------------------------------------------
The Company issued a Press Release dated April 20, 2004, announcing
the Company's financial results for the quarter ended March 31, 2004.
A copy is furnished with this Form 8-K as Exhibit 99.1 and is
incorporated by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE ST. JOE COMPANY
Dated: April 20, 2004 By: /s/ Michael N. Regan
----------------------------------------
Name: Michael N. Regan
Title: Senior Vice President
Exhibit 99.1
The St. Joe Company Reports First Quarter 2004 Net Income of $13.1
Million, or $0.17 Per Share; JOE Raises 2004 Full Year Guidance
JACKSONVILLE, Fla.--(BUSINESS WIRE)--April 20, 2004--The St. Joe
Company (NYSE:JOE):
-- JOE and Simon Property Group Sign Letter of Intent for Pier
Park Land Sale
-- 382 Potential Buyers Vie for SummerCamp's First Release of 69
Units
-- RiverTown and WindMark Beach Land Use Plans Win County
Commission Approvals
The St. Joe Company (NYSE:JOE) today announced that its first
quarter 2004 Net Income was $13.1 million, or $0.17 per share,
compared with $14.4 million, or $0.18 per share, for the first quarter
of 2003. Net Income in the first quarter of 2003 included conservation
land results of $8.3 million, or $0.11 per share. There were no
conservation land sales in the first quarter of 2004. All per-share
references in this release are presented on a fully diluted basis.
"JOE is off to a good start in 2004, turning in a solid first
quarter. Demand for our real estate products -- resort and primary
residential, commercial and rural land -- remains strong," said Peter
S. Rummell, chairman and CEO of JOE. "We are particularly pleased with
our performance considering that the first quarter is 'off-season' in
Northwest Florida and that we limited the amount of resort product
released for sale. We're looking forward to the rest of the year and
are pleased to raise our full-year guidance for 2004."
"We are being disciplined about the release of new product in
Northwest Florida," said Rummell. "As the market begins to fully
appreciate the values being created in this region, we are setting our
pace and phasing our development to maximize those values. We've long
said that JOE's unique advantages -- a strong balance sheet, low-basis
land, a well-tested strategy and a strong management team -- enable us
to do things many other real estate development companies cannot. We
continue to closely manage our inventory so that as much of our land
as possible benefits from the appreciation that we are building with
the region's increased visibility, infrastructure development and
place-making."
"At the same time, we are fully engaged in the entitlements
process to create new inventory in high-quality communities," said
Rummell. "JOE has recently gained key approvals for three significant
new communities -- WaterSound and WindMark Beach in Northwest Florida,
and RiverTown near Jacksonville. We also received a key approval for
DeerLake in Walton County. Though certain regulatory steps remain,
these communities will bring new inventory to key JOE markets. As
we've long said, the demographic trends are working in our favor. More
and more people continue to enter the key second/retirement home
purchasing demographic. Our abundant supply of high-quality, low-basis
land in Florida provides JOE unique flexibility in meeting that
demand."
"We are benefiting from the synergy inherent in our regional
place-making strategy," said Rummell. "Our residential developments
are now stimulating commercial development and attracting attention
from national retailers and businesses looking for expansion
opportunities. We've talked before about growing the value creation
cycle in Northwest Florida - we are seeing it take root."
"Yesterday, Simon Property Group, Inc. and JOE announced an
agreement in principle to jointly develop Pier Park in Panama City
Beach," said Rummell. "Simon will purchase property from JOE to
develop a retail, restaurant and entertainment project."
Under the terms of the Letter of Intent, Simon would initially
purchase approximately 90 acres in Pier Park with the option to
purchase up to an additional 125 acres in and near Pier Park. JOE will
retain approximately 15 acres on the north side of Front Beach Road
for future complementary hospitality development.
"We're also benefiting from a broader understanding of the unique
qualities of Northwest Florida - and changing demographics within the
region," said Rummell. "We're seeing increasing momentum in the
traffic of qualified buyers at our Northwest Florida resort and
residential communities - and the region as a whole is beginning to
show signs of improving demographics. In Bay County, primary home
sales in JOE communities have doubled over the same period a year ago.
SouthWood continues to perform well. And we're also seeing growing
strength in other parts of Florida such as Victoria Park in Deland and
Artisan Park in Orlando."
"SummerCamp's first release of 29 homes and 40 home sites drew an
excellent response," said Rummell. "The final 69 buyers were chosen
based on a predetermined selection process from a pool of 382
registered potential buyers, each of whom had previously submitted a
$5,000 deposit. SummerCamp, JOE's new beachfront resort community in
Franklin County, is the first JOE community on St. James Island where
a planning process is underway for the 24,000 acres JOE owns there."
"Our commercial division also had a strong quarter with
significant sales of commercial properties both inside and outside JOE
communities," said Rummell. "We are seeing buyers for different
property uses, including apartment complexes, retail sites and several
commercial uses throughout Northwest Florida. Panama City Beach, for
example, is experiencing a significantly higher interest from national
and regional developers."
"St. Joe Land Company also had a strong quarter with a large
number of smaller transactions and one large transaction for the sale
of 866 acres for $10.0 million, or $11,550 per acre," said Rummell.
"Prices per-acre vary with the type and location of the land sold."
"We are proud of our excellent track record of producing strong
financial results for shareholders while creating outstanding places
in Northwest Florida and the other areas of Florida where we do
business," said Rummell. "JOE remains a one-of-a-kind company. Now,
with a variety of new projects positioned to come to market with sales
that will continue for many years, we have an even greater opportunity
to capitalize on these advantages in 2004 and beyond."
OUTLOOK
Guidance for 2004 Raised
"Building on a very solid first quarter and with a strong pipeline
of business, we look ahead to the remainder of this year with
increased confidence," said Kevin M. Twomey, president, COO and CFO of
JOE.
"In February, we made comparisons to 2003 excluding conservation
land sales ($36.4 million pretax; $22.7 million net income), and the
non-cash Advantis charge ($8.8 million deduction from net income),"
said Twomey. "Excluding those items, 2003 earnings per share were
$0.80. At that time, we expected the full-year 2004 per share income,
before conservation land sales, to increase by 10 to 15 percent over
that adjusted 2003 total."
"We are pleased to raise these expectations," said Twomey. "We
currently expect our 2004 results to be at the high end of the range,
or higher if certain potential transactions are consummated. The
timing of transactions is difficult to forecast. As the year moves
forward, we expect to have greater clarity on the potential
improvements to the outlook."
"We anticipate having sufficient resources available to fund
development efforts, pay dividends, repurchase shares and acquire
surrendered shares," said Twomey. "Timing of our repurchase activity
will reflect the magnitude and timing of cash flows and earnings."
"Going forward we are evaluating several new strategies for large
real estate sales," said Twomey. "One alternative is to sell larger
tracts of land to homebuilders and other real estate buyers. To date,
we have acted as the primary developer on our land. The increasing
visibility of Northwest Florida has generated increased interest in
the region among homebuilders and other community developers. As a
result, the velocity of inquiries from developers interested in
purchasing land has increased."
"We are also considering a number of ways to diversify our
investment property portfolio," said Twomey. "We are currently
evaluating the purchase of land assets in addition to commercial
office properties for our investment portfolio. At the end of the
first quarter, we owned approximately $328 million of office
properties purchased with a portion of our land sale proceeds. We are
considering adding strategic land assets to the portfolio in order to
leverage our development expertise to transform this land to a higher
and better use."
Community Development
"Results from the Community Development segment are expected to
continue to grow in 2004," said Twomey. "We see excellent results,
particularly at WaterColor, as future home sites in phases 3 and 4
come to market. WaterSound Beach should also perform well during 2004
and 2005 depending on the speed with which we release product for
sale. Pricing has been particularly strong at WaterColor and
WaterSound Beach. Contributions from a number of our primary home
communities, such as St. Johns Golf and Country Club, Victoria Park,
Artisan Park and SouthWood in Florida, and Saussy Burbank in North and
South Carolina, are also important. We are also very excited about the
response we received for our first release at SummerCamp."
Commercial Real Estate
"During 2004, our commercial real estate development division will
focus on the development and sale of retail, multifamily and
commercial properties in Northwest Florida," said Twomey. "We expect
commercial pretax income from continuing operations to be up compared
to 2003. The first quarter was a good start. We have a strong and
growing pipeline of sales for retail, light industrial, commercial and
apartment use. Our commercial pipeline is solid, and we are optimistic
about our prospects."
"The pending land sale to Simon Property Group, Inc. at Pier Park
is expected to close, in part, in 2004," said Twomey. "And we expect
this transaction to be a catalyst for additional success in Panama
City Beach."
St. Joe Land
"We also expect 2004 results from St. Joe Land Company, our land
sales division, to be well above the levels achieved in 2003," said
Twomey. "Income from land sales in the first quarter of this year was
exceptionally strong. We expect results for the remaining quarters of
the year to be good, but not as strong as the first quarter."
SALE OF TRUST SHARES
On February 10, 2004, the Alfred I. duPont Testamentary Trust sold
6 million shares to the public, bringing its percentage ownership of
JOE, together with its beneficiary, The Nemours Foundation (the
Trust), down to 23.5 percent as of March 31, 2004. The Trust's
ownership position was 47.2 percent as of March 31, 2003 and 69.8
percent as of January 1, 1997.
DIVIDENDS AND STOCK REPURCHASE PROGRAM
On February 10, 2004, the board of directors declared a quarterly
cash dividend for the first quarter of 2004 of $0.12 per share on its
common stock, payable on March 31, 2004, to shareholders of record at
the close of business on March 15, 2004.
During the first quarter of 2004, the company expended $36.1
million for dividends and the acquisition of shares. During the first
quarter, JOE acquired 677,160 of its shares at a cost of $27.0
million, or an average price of $39.79 per share. Of these amounts,
403,000 shares were acquired through open market purchases for $16.0
million (an average of $39.76 per share); 182,955 shares were
purchased from the Trust for $7.3 million (an average of $39.73 per
share); and 91,205 shares of stock were surrendered by company
executives with a value of $3.6 million as payment for the strike
price and taxes due on exercised stock options and taxes due upon
vesting of restricted stock.
Table 1
Stock Repurchase Activity
Through March 31, 2004
Shares
-------------------------------------------
Purchased Purchased Total
From From Cost (in Average
Period Public Trust Surrendered Total millions) Price
- -------- ------------------------------------------- --------- -------
1998 2,574,200 -- 11,890 2,586,090 $55.5 $21.41
1999 2,843,200 -- 11,890 2,855,090 69.5 24.31
2000 3,101,566 415,500 -- 3,517,066 80.2 22.78
2001 3,485,400 3,585,900 58,550 7,129,850 176.0 24.67
2002 2,583,700 2,586,206 256,729 5,426,635 157.6 29.03
2003 1,469,800 1,085,374 812,802 3,367,976 102.9 30.55
2004
(1st
Qtr.) 403,000 182,955 91,205 677,160 27.0 39.79
------------------------------------------- --------- -------
Total/
Weighted
Average 16,460,866 7,855,935 1,243,066 25,559,867 $668.8 $26.14
=========================================== ========= =======
As shown in Table 1, since January 1, 1998, 25,559,867 shares have
been acquired for $668.8 million through the repurchase and surrender
of shares.
At March 31, 2004, 75,710,159 JOE shares were outstanding. The
number of weighted-average diluted shares in the first quarter of 2004
was 77,731,088. At March 31, 2004, $19.9 million remained of the
company's current stock repurchase authorization of $150 million. On
February 10, 2004, JOE's board of directors authorized an additional
$150 million repurchase authorization.
"We continue to make good progress on our program to pay dividends
and acquire stock through the purchase and the surrender of shares,"
said Twomey. "We remain optimistic about reaching the benchmark of
$125 million to $175 million we established for the program this year,
and continue to view the program as an important contributor to
shareholder value."
ENTITLEMENTS
JOE has a broad range of entitlements in hand or in various stages
of the approval process for residential, resort, RiverCamps and rural
residential products in Northwest Florida and other high-growth
regions of the state.
Table 2 summarizes such entitled residential projects at March 31,
2004.
Table 2
Summary of Entitled JOE Residential Projects in Florida(a)
March 31, 2004
Units Sold/Under
Total Project Total Project Contract
Project County Acres Units(b) Thru 3/31/04
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Artisan Park -
Celebration Osceola 160 616 145
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CampCreek Golf
Cottages Walton 10 50 0
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The Hammocks Bay 143 459 258
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Hampton Park Duval 150 158 136
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James Island Duval 194 365 363
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Palmetto Trace Bay 138 523 234
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Pier Park
(Residential) Bay 10 125 0
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RiverCamps on
Crooked Creek
(Release One) Bay 95 27 23
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RiverSide Calhoun 362 13 0
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SouthWood Leon 3,770 4,770 638
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St. Johns Golf
& County Club St. Johns 820 799 545
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Victoria Park Volusia 1,859 4,000+ 428
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Walton Corners Leon 60 33 0
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WaterColor Walton 499 1,140 740
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WaterSound
Beach Walton 256 499 300
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WaveCrest Bay 6 88 0
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WindMark Beach
(phase 1) Gulf 80 110 100
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Total 8,612 13,775+ 3,910
- -------------------------------------=================================
(a) A project is deemed entitled when all major discretionary
governmental approvals have been received. Approvals may be
subject to legal challenges which may affect timing, scale and
viability.
(b) Total project units represent the number of units entitled. The
actual number of units to be constructed at full build-out may be
lower than the number entitled.
Table 3 summarizes the status of JOE residential projects in
Florida in the entitlement process as of March 31, 2004.
Table 3
Summary of JOE Residential Projects in the
Entitlement Process in Florida(a)
March 31, 2004
Total Approximate
Project Project
Project County Acres Units(b)
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East Lake Powell Bay 181 360
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WaterMill (Jones Homestead) Gulf 94 120
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RiverCamps on Crooked Creek
(Future phases) Bay 1,395 423
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Cutter Ridge (Tarpon Sound) Franklin 30 90
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DeerLake (The Pines) Walton 62 197
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West Bay DSAP Bay 6,789 5,842
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RiverTown St. Johns 4,200 4,500
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SummerCamp Franklin 782 499
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WaterSound Walton 1,443 1,060
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WindMark Beach (future phases) Gulf 2,000 1,550
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Total 16,976 14,641
- -----------------------------------------------=======================
(a) All developments listed have entitlement steps remaining that
could affect timing, scale and viability.
(b) The actual number of units to be entitled or constructed at full
build-out may be lower than the number proposed to be entitled.
JOE's pipeline of residential projects extends well into the
future with more than 24,000 units entitled or at various stages in
the entitlement process.
WEST BAY SECTOR PLAN
Planning continues on the West Bay Detailed Specific Area Plan
(DSAP) in Bay County that includes 16,556 acres of JOE land near the
proposed 4,000-acre site for the relocation of the Panama City - Bay
County International Airport.
The West Bay DSAP consists of three phases. Phase 1, which
operates independently of the airport approvals, provides for 685
residential units, 360,000 square feet of commercial space, a 150-room
hotel and a 50 slip marina. Phases 2 and 3 are conditioned on the
final approvals of the relocated airport. At full build-out, the West
Bay DSAP provides for approximately 4.4 million square feet of
industrial, commercial and retail space, 5,842 dwelling units, 490
hotel rooms and two marinas.
The West Bay DSAP and a DSAP for the proposed relocated airport
were approved by the Bay County Commission in December 2003. These two
land use plans begin the implementation of the West Bay Sector Plan, a
blueprint for future development and conservation of approximately
75,000 acres of JOE-owned land in northwestern Bay County. A review by
the Florida Department of Community Affairs was completed in February
of 2004 and both DSAPs were found to be in compliance with state law.
As expected, a no-growth citizens group has challenged the state's
ruling. The challenger must now prove that the state and local
governments were incorrect and that the plans are not in compliance
with Florida state law. A number of additional regulatory steps remain
before the two DSAPs become final.
The airport land use plan creates the opportunity to relocate the
Panama City - Bay County International Airport within the West Bay
Sector. The decision to relocate the airport ultimately rests with the
Federal Aviation Administration (FAA) and the Panama City - Bay County
International Airport Authority. The FAA and the Airport Authority
continue to work on an Environmental Impact Statement for the proposed
new airport. Bay County conducted a non-binding straw poll on the
airport relocation during the Democratic Party's Presidential
Preference Primary in March of 2004. With only 23 percent
participating, a small plurality of Bay County voters opposed the
airport's relocation. None of the other counties served by the airport
participated in the straw poll. Later in March, the Airport Authority
announced that it would continue the relocation process. Subject to
the receipt of all final approvals and funding of the airport
relocation at West Bay, JOE has committed to donating the 4,000-acre
airport site to the Airport Authority as well as approximately 10,000
additional acres for environmental mitigation that would become part
of the West Bay Preservation Area. According to the Airport
Authority's most recent estimate, a relocated facility could be
completed as early as 2008.
SEGMENT RESULTS
COMMUNITY DEVELOPMENT
Pretax income from continuing operations for the Community
Development Segment for the first quarter of 2004 was $9.1 million,
compared with $12.4 million in the first quarter of 2003. Results for
the 2004 period reflect our decision to manage the supply of product
to achieve maximum long term results at WaterColor and WaterSound
Beach. Although the number of closings are higher in the first quarter
of 2004 than the same period last year, a portion of the earnings
attributable to this quarter's closings was reflected in earlier
periods.
"We see increasing strength in all of our Florida markets," said
Rummell. "We are now moving into the traditional buying season in
Northwest Florida with growing momentum. WaterColor, our signature
community, continues to make steady progress. Demand continues to be
strong for new homes and home sites."
Table 4
Community Development
($ in millions)
For the Three Months
Ended March 31,
2004 2003
----------------------------- ------------------------------
Number Number
of units Gross of units Gross
closed Revenue Profit closed Revenue Profit
----------------------------- ------------------------------
Home Sites 105 $23.7 $14.3 82 $17.3 $11.2
Homes(a) 360 74.6 7.5 224 67.9 12.8
----------------------------- ------------------------------
Total 465 $98.3 $21.8 306 $85.2 $24.0
============================= ==============================
(a) Homes include single family, multifamily and Private Resident Club
units. Multifamily and PRC revenue is recognized, if preconditions
are met, on a percentage of completion basis. As a consequence,
revenue and closings may occur in different periods.
Units Placed Under Contract
For the Three Months
Ended March 31,
2004 2003 Percentage Change
------- ------- -------------------
Home Sites 26 85 (69)%
Homes(a) 512 312 64%
------- ------- -------------------
Total 538 397 36%
======= ======= ===================
(a) Homes include single family homes, multifamily and PRC units.
Table 5
Backlog(a)
At March 31,
($ in millions)
Units Sales Price
----------------- -----------------------
2004 2003 2004 2003
-------- -------- ----------- -----------
Home Sites 15 26 $2.2 $2.6
Homes 882 623 231.4 201.9
-------- -------- ----------- -----------
Total 897 649 $233.6 $204.5
======== ======== =========== ===========
(a) Backlog represents units under contract but not yet closed.
Northwest Florida
WaterColor
In the first quarter of 2004, 60 home sites and 5 housing units
closed at WaterColor. During the quarter, contracts were accepted for
9 home sites, 4 housing units and 10 Private Residence Club units at
average prices of $401,000, $830,000 and $196,000, respectively.
"WaterColor has earned the reputation and status of a premier
beachfront community. This has increased demand not only within
WaterColor, but also at other JOE communities across Northwest
Florida," said Rummell. "For example, WaterColor and the WaterColor
Inn continue to be a catalyst for changing perceptions about the
region. During the first quarter, WaterColor Inn was featured in Delta
Air Line's Sky magazine."
The first two phases of WaterColor are nearly sold out. Sales have
been strong in phase 3 of the community. At the end of the quarter, 98
home sites and 5 homes of the 231 units in phase 3 remained to be
released over the next year. This phase is enhanced by a pedestrian
bridge spanning Western Lake that connects this phase to the first
phase of WaterColor.
During the fourth quarter of 2003, predevelopment activity started
on phase 4 of WaterColor, a 60-acre parcel on the east side of County
Road 395 adjacent to the Publix Super Market at WaterColor Crossing.
Development in phase 4, with approximately 185 units, is scheduled to
begin in late 2004.
"WaterColor Inn's high national visibility is helping drive demand
for our real estate products," said Rummell. "The Inn is a key
component of our marketing strategy and is changing perceptions about
Northwest Florida. It is a key marketing force for our real estate
products not just at WaterColor but throughout the region. Real estate
buyers are usually visitors first. During the Easter weekend, the
60-room WaterColor Inn was at 95 percent capacity and the 128 units in
the community's rental program were at 90 percent capacity."
Construction of the WaterColor Private Residence Club (PRC),
adjacent to WaterColor Inn, is expected to be completed in late 2004.
As of March 31, 2004, JOE has accepted contracts for 33 ownership
interests in the PRC. The WaterColor PRC consists of 88 ownership
interests in 11 two-bedroom, two-bath, fully furnished luxury vacation
multifamily units. Each owner receives a deed to 1/8 interest in a
specific residence for approximately $205,000. Each PRC owner is
entitled to a minimum of 5 weeks a year in the PRC, plus additional
time throughout the year based on availability.
From WaterColor's inception through March 31, 2004, contracts
accepted or closed totaled 740 units. WaterColor is expected to have
up to 1,140 units at full build-out.
WaterSound Beach
In the first quarter of 2004, 11 home sites and 50 multifamily
housing units closed at WaterSound Beach at average sales prices of
$369,000 and $1.1 million, respectively. During the quarter, contracts
were accepted for 7 housing units at an average price of $1.5 million.
WaterSound Beach, a gated beachfront community south of County
Road 30A in south Walton County, is planned to include single family
homes, home sites and multifamily units. It is expected to have 499
residential units at full build-out.
"We are very pleased with the success of WaterSound Beach," said
Rummell. "We believe the market is starting to understand the
significance of WaterSound Beach's 85-acre beachfront preserve fronted
by one of the most beautiful beaches anywhere."
The Crossings and Compass Point are multifamily neighborhoods
within WaterSound Beach. The remaining 50 of 80 beachfront units in
The Crossings closed in the first quarter of 2004. Earnings
attributable to these multifamily units were recorded in 2003 under
the percentage of completion method of accounting. Prices for these 80
residences ranged from $895,000 to $1.5 million, with an average over
$1.1 million. One unit will be retained as a model for the next phase
of multifamily units.
Based on the success to date at The Crossings, additional phases
of multifamily units are being planned. This new multifamily
neighborhood, Compass Point, is planned for 92 units in four phases.
In the first quarter, 7 units were placed under contract at an average
price of $1.5 million. In the second quarter of 2004, all remaining
units in the first phase of Compass Point are slated to be released
with prices expected to average over $1.3 million per unit.
Construction has started on the first 25 Compass Point residences. An
additional second phase of multifamily residences, planned for 24
units, is to be released later in 2004, followed by 43 units scheduled
for 2005 and 2006.
There were no single family home sites released or sold in the
first quarter of 2004 at WaterSound Beach. At March 31, 2004, the
remaining 113 single family home sites, including 8 on the beachfront,
have not been released for sale.
The 2004 Southern Accents magazine show home at WaterSound Beach
is scheduled to open for public tours on Memorial Day weekend. The
4,200-square-foot beachfront home, designed by Cooper, Robertson &
Partners, will be featured in the July/August 2004 issue of Southern
Accents.
From WaterSound Beach's inception through March 31, 2004,
contracts for 300 units were accepted or closed.
WaterSound
On October 7, 2003, the Walton County Commission approved a
development order for 478 of the 1,060 planned units, along with
35,000 square feet of commercial space, being planned for the next
phase of WaterSound. Pending the receipt of final environmental
permits, infrastructure construction is expected to begin in the
second half of 2004. Work continues on a Development of Regional
Impact (DRI) application for the project that would include the
balance of the units. Progress is expected on the DRI by the end of
the year.
This future phase of WaterSound is located on 1,443 acres of
timberland between U.S. 98 and the Intracoastal Waterway.
"The master plan for the future development of the next phase of
WaterSound calls for a full package of amenities, including a
family-friendly six-hole golf course and a nine-hole golf course both
designed by Davis Love III, tennis and access to Lake Powell plus the
opportunity to purchase memberships in a beach club at WaterSound
Beach and Camp Creek Golf Club," said Rummell. "To achieve higher
values, we don't intend to begin sales until key amenities are in
place."
DeerLake
On March 4, 2004, the Walton County Commission approved a 197-unit
first phase of DeerLake, formerly called The Pines, a proposed
development on the beach side of County Road 30-A. A number of
additional regulatory steps remain before the land use plan becomes
final and certain environmental permits are required before
construction of the first phase of the development can begin.
Cooper, Robertson & Partners, the firm that developed the master
plan for WaterColor, will create the master plan for this community.
It is being planned to be a high-end, exclusive community with pricing
expected to be comparable to WaterColor.
Sales are expected to begin in 2005.
Palmetto Trace, The Hammocks
In the first quarter of 2004, contracts closed for 31 homes at an
average price of $164,000 at JOE's two primary home communities in Bay
County, Palmetto Trace and The Hammocks. During the quarter, contracts
were accepted for 68 homes at an average price of $143,000.
"Sales at these two communities were very strong in the first
quarter," said Rummell. "Sales at Palmetto Trace were twice our
original expectation. Sales have also been strong at The Hammocks in
Lynn Haven. We have additional product moving through the planning
process in order to meet the strong primary residential demand in Bay
County. We expect increases in sales velocity to continue in 2004 as
retirees relocate there and new jobs are added to the Panama City
Beach and Bay County economy."
From the inception of Palmetto Trace and The Hammocks through
March 31, 2004, contracts were closed for 66 home sites and 426 homes
at average prices of $31,000 and $146,000, respectively.
WindMark Beach
On April 6, 2004, the Gulf County Commission (GCC) unanimously
approved a land-use plan for future phases of WindMark Beach,
consisting of 1,550 residential units in a mixed-use development in
Gulf County, Florida. WindMark Beach is located on approximately 2,000
acres owned along more than 15,000 feet of beachfront near the town of
Port St. Joe.
The GCC approved a comprehensive plan amendment approving the
proposed land-use, an order for a DRI for WindMark Beach and policies
for implementation of the project.
A number of additional regulatory steps remain before this new
land use plan becomes final, including review by the Florida
Department of Community Affairs. Certain environmental permits are
also required before construction can begin on these future phases of
WindMark Beach.
"We are very excited about WindMark Beach and believe it will
create tremendous value for Gulf County and JOE shareholders," said
Rummell. "WindMark Beach embraces, restores and protects an unspoiled
stretch of beautiful beach, and makes it accessible to the public with
activities that center on family fun. Together with the Gulf County
community, we are planning WindMark Beach to respect local culture,
landscape, architecture and the environmentally special lands nearby."
Plans for WindMark Beach provide that once a 3.5-mile portion of
U.S. 98 is moved, the existing roadbed through JOE's land would be
used to create a public beachfront trail system. No residential
development is planned seaward of the beachfront trails, and JOE will
provide public beach parking areas and multiple access points for the
public.
Sales of home sites in the first phase of the community began in
2001. In the first quarter of 2004, no home sites closed and no new
contracts were accepted at this first phase of WindMark Beach, which
included 110 home sites, all but 10 of which have been previously
sold.
"We are particularly pleased with the increased recognition of the
quality of WindMark Beach," said Rummell. "Last week, for instance, we
accepted a contract for a beachfront home site in the first phase of
WindMark Beach for $1.1 million. This compares with an early-2003
closing of an adjacent beachfront home site for $760,000 and a 2001
sale for $415,000. We are optimistic that the perceived value of the
project will grow even more as we bring the larger WindMark Beach to
market with amenities.
"We plan to release only three additional home sites for sale in
2004 in phase 1 of WindMark Beach, one on the beach and two with beach
views," said Rummell. "In addition, JOE has two remaining beachfront
home sites in phase 1 that we expect to release for sale in future
years. Sales of homes and home sites in the future phases of the
community are expected to begin in 2005."
From WindMark Beach's inception through March 31, 2004, JOE
accepted or closed contracts for 100 home sites at an average price of
$334,000.
SouthWood
In the first quarter of 2004, 10 home sites and 53 homes closed at
SouthWood at average prices of $83,000 and $221,000, respectively.
During the first quarter, contracts were accepted for 8 home sites and
42 homes at SouthWood at average prices of $82,000 and $240,000,
respectively.
From SouthWood's inception through March 31, 2004, JOE accepted or
closed contracts on 638 units. SouthWood is entitled for 4,770
residential units plus a variety of retail shops, restaurants,
community facilities, light industrial sites and professional offices.
SummerCamp
On April 17, 2004, 382 potential buyers sought reservations for 40
home sites and 29 homes at SummerCamp, a new beachfront vacation and
second-home community on St. James Island in southeastern Franklin
County. The final 69 buyers were chosen based on a predetermined
selection process from a pool of 382 registered potential buyers, each
of whom had previously submitted a $5,000 deposit. Home prices in this
release ranged from the high $400,000s to over $1 million, and home
sites ranged from $150,000 to $800,000. Pending the receipt of
regulatory and environmental permits, infrastructure construction is
expected to begin in the third quarter of 2004 with closings to begin
in the fourth quarter of 2004.
With nearly 4 miles of waterfront, SummerCamp is planned for 499
units on 782 acres of JOE timberland. A sales preview center for the
community opened in Tallahassee early this year and an onsite sales
center, general store and outfitter are scheduled to open in early
2005. SummerCamp's current plans call for a community beach club with
cabanas, two smaller beach clubs, several observation piers, gathering
pavilions, a canoe and kayak boathouse, one small community dock and
miles of interconnected nature trails.
"SummerCamp is the first development of its kind in this part of
Northwest Florida," said Rummell. "Our team has developed a SummerCamp
architectural style based on historic and well recognized communities
like St. Teresa and Apalachicola evoking the traditional communities
of Old Florida. This community is about families and friends making
and renewing connections."
St. James Island
JOE is involving the citizens of Franklin County in a public
visioning process for future development of 24,000 acres of JOE land
on St. James Island. The process began in the fourth quarter of 2003
and is continuing with good community participation. The St. James
Island Visioning Plan and an amended Franklin County Comprehensive
Plan are expected to be ready for presentation to the Franklin County
Board of County Commissioners later this year. These plans will
outline the use of this land for decades to come.
St. James Island, located at the eastern end of Franklin County,
represents an area of approximately 49,000 acres, 24,000 of which are
owned by JOE. It includes the area bounded by the city of Carrabelle
on the west and Bald Point State Park on the east along the Gulf of
Mexico. SummerCamp is located on St. James Island.
During the first quarter, JOE closed the purchase of the 49-acre
Timber Island in Franklin County from the Florida Department of
Environmental Protection for $6.8 million. Long term plans for the
island, located near Carrabelle and adjacent to St. James Island,
include a marina and related facilities.
Northeast Florida
RiverTown
RiverTown, with 3.5 miles of frontage on the beautiful St. Johns
River, is located in St. Johns County near Jacksonville. It is being
planned for approximately 4,500 units on 4,200 acres. In the first
quarter, the St. Johns County Commission approved a comprehensive plan
amendment and a DRI order for the project. On April 14, 2004, the
Florida Department of Community Affairs determined that the RiverTown
land use plan was in compliance with state law. A number of additional
regulatory steps remain before the land use plan becomes final,
including an appeal period for the compliance ruling. Certain
environmental permits are required before construction of RiverTown
can begin.
"RiverTown is located on one of the last stretches of riverfront
in Northeast Florida suitable for large-scale residential
development," said Rummell. "It is within easy commuting distance to
Jacksonville. We believe JOE's proven ability to provide quality
community developments combined with the unique setting will make
RiverTown one of the most sought after products in this market."
Sales activity for RiverTown is expected to begin in 2005.
St. Johns Golf & Country Club
In the first quarter of 2004, contracts closed on 12 home sites
and 22 homes at St. Johns Golf & Country Club at average prices of
$75,000 and $321,000, respectively. Contracts were accepted for 26
homes at an average price of $356,000.
"St. Johns Golf & Country Club had a solid first quarter," said
Rummell. "Conversion rates, from prospect to contract to closing, have
improved from mid-2003 through the first quarter of 2004."
Construction has started on the last two phases in the community.
Sales are expected to be completed by early 2006. From inception
through March 31, 2004, JOE accepted or closed contracts for 545 units
at this 799-unit residential development south of Jacksonville in St.
Johns County.
Hampton Park, James Island
In the first quarter of 2004, contracts closed on 13 homes at
Hampton Park in Jacksonville at an average price of $343,000.
Contracts were accepted for 6 homes with home prices averaging
$386,000.
Sales at Hampton Park are expected to conclude by the end of 2004.
From Hampton Park's inception through March 31, 2004, contracts for
136 units were accepted or closed. Hampton Park is planned for 158
units at full build-out.
In the first quarter of 2004, contracts closed on 4 homes at James
Island in Jacksonville at an average price of $362,000. Contracts were
accepted for 4 homes with prices averaging $390,000. One model home
remains for sale in this community, and one additional unit has not
been released for sale.
Central and South Florida
Victoria Park
During the first quarter of 2004, contracts closed on 6 home sites
and 31 homes at Victoria Park at average prices of $85,000 and
$209,000, respectively. Contracts were accepted for 3 home sites and
66 homes at average prices of $64,000 and $227,000, respectively.
"We are very pleased with trends at Victoria Park. The number of
contracts closed at Victoria Park increased 41 percent compared to the
first quarter of 2003," said Rummell. "With the Interstate 4 bridge
over the St. Johns River nearing completion, Victoria Park is becoming
more attractive to buyers from parts of nearby Orlando. Sales traffic
is increasing, additional products are coming online, and we believe
Victoria Park is in an excellent position to perform well going
forward."
Victoria Park, located between Orlando and Daytona Beach, is set
on 1,859 acres in the historic college town of DeLand. This mixed-used
community is planned for more than 4,000 residences built among parks,
lakes and conservation areas.
From Victoria Park's inception through March 31, 2004, contracts
were accepted or closed on 428 units.
Celebration, Artisan Park
In the first quarter of 2004, 6 home sites and 4 homes closed at
average prices of $150,000 and $364,000, respectively, at Artisan
Park, a 160-acre village in the town of Celebration near Orlando. JOE
is the manager and owner of 74 percent of the joint venture developing
Artisan Park. During the first quarter, contracts were accepted for 6
home sites and 82 homes at average prices of $150,000 and $357,000,
respectively.
"Artisan Park opened with excellent sales," said Rummell.
"Contracts and reservations are already ahead of our expectations for
the entire year. This is one of the last residential neighborhoods to
be developed in Celebration, and there is strong demand for single
family homes and condominiums."
Plans for the neighborhood feature approximately 314 single-family
homes plus 302 condominium homes, along with parks, trails and an
outdoor performance area and community clubhouse with a fitness
center, pool and educational and recreational programs.
Paseos
In the first quarter of 2004, contracts for 32 homes closed at an
average price of $378,000 at Paseos, a 175-acre community with 325
single family home sites in Jupiter in Palm Beach County in South
Florida. JOE is the manager and owner of 50 percent of the joint
venture developing Paseos.
In the first quarter, contracts were accepted for 76 homes at an
average price of $424,000. There were 108 homes sold in Paseos in
2003.
"Paseos had an excellent first quarter," said Rummell. "Contracts
and reservations are nearing the original objective for the entire
year. The Jupiter market has attracted national attention as one of
South Florida's most desirable places to live. Paseos is
well-positioned to benefit from the growth in this part of Florida."
The proximity of Paseos to major employment centers, excellent
public schools, the beaches and a host of various recreational and
entertainment options makes it ideal for families of all sizes. A
clubhouse, pool and a tennis court are scheduled to open later this
year. There are six furnished model homes on site. Home prices range
from $300,000 to over $600,000.
From Paseos's inception through March 31, 2004, contracts on 216
units were accepted or closed. Sales at Paseos are expected to be
completed by end of 2004.
Rivercrest
In the first quarter of 2004, contracts for 55 homes closed at an
average price of $148,000 at Rivercrest, a 450-acre primary residence
community with 1,300 residential units near Tampa in east Hillsborough
County. JOE is the manager and owner of 50 percent of the joint
venture developing Rivercrest.
In the first quarter, contracts were accepted for 158 homes at an
average price of $157,000. In the full year of 2003, contracts were
accepted on 231 homes in Rivercrest.
"We are seeing exceptional momentum at Rivercrest as it offers a
wide variety of prices including townhomes priced from the $90,000s,
as well as garden villas and single-family homes priced from the low
$120,000s to the $200,000s," said Rummell. "The community offers a
lifestyle rich in recreational opportunities. An elementary school was
built on land provided by the joint venture within Rivercrest and
opened for the 2003 school year."
From Rivercrest's inception through March 31, 2004, contracts for
514 units were accepted or closed.
Saussy Burbank
In the first quarter of 2004, Saussy Burbank, JOE's homebuilder
based in Charlotte, N.C., closed the sale of 147 homes compared to 105
homes in the first quarter of 2003. Average prices for the homes were
$205,000 and $209,000, respectively. During the first quarter,
contracts were accepted for the purchase of 197 homes at an average
price of $215,000.
COMMERCIAL REAL ESTATE
The Commercial segment consists of St. Joe Commercial, Inc., JOE's
commercial real estate development unit, and Advantis, the company's
commercial real estate services unit. Pretax income from continuing
operations from the Commercial segment was $1.4 million for the first
quarter of 2004, compared with $3.3 million in the same quarter of
2003.
St. Joe Commercial
For the first quarter of 2004, St. Joe Commercial had pretax
income of $1.5 million, compared to $4.9 million in the first quarter
a year ago.
"Our commercial development division turned in a good first
quarter both in terms of value creation and strategic
accomplishments," said Twomey. "Gross proceeds from Northwest Florida
commercial land sales totaled $2.6 million compared to $5.5 million in
the same period in 2003. Several large transactions were balanced with
a steady flow of smaller land sales that included a wide variety of
product throughout the region. But as we have often said, we expect
earnings from these sales to be 'lumpy' as the number and size of
transactions vary from quarter to quarter."
During the first quarter of 2004, JOE sold 7 Florida commercial
land parcels, totaling 82 acres, at an average price of approximately
$32,000 per acre.
Table 6 summarizes commercial land sales in Florida for the first
quarters of 2003 and 2004.
Table 6
Florida Commercial Land Sales
Quarter Ended March 31, 2004
Number of Gross Sales Price Average Price/Acre
Land Sales Acres Sold (in thousands) (in thousands)
- ------------ --------- ---------- ----------------- ------------------
Unimproved 5(a) 74 $2,350 $32
Improved 2 8 250 31
--------- ---------- ----------------- ------------------
Total/Average 7 82 $2,600 $32
========= ========== ================= ==================
Quarter Ended March 31, 2003
Number of Gross Sales Price Average Price/Acre
Land Sales Acres Sold (in thousands) (in thousands)
- ------------ --------- ---------- ----------------- ------------------
Unimproved 6(a) 129 $4,403 $34
Improved 9 22 1,088 49
---------- ---------- ---------------- ------------------
Total/Average 15 151 $5,491 $36
========== ========== ================ ==================
(a) Includes sales of 18 acres in 2004 and 10 acres in 2003 which are
not developable.
"We see growing interest in Northwest Florida from national and
regional multifamily developers, and the value of land for apartment
development is moving closer to comparable prices in other parts of
the nation," said Twomey. "Northwest Florida's economic development
cycle is moving into a phase where demand is increasing for
multifamily units. In addition, as multifamily developers position
themselves to take advantage of possible growth in the region, we
expect more activity for this type of real estate product."
Table 7 summarizes St. Joe Commercial's multifamily parcel
pipeline:
Table 7
Multifamily Pipeline
As of March 31, 2004
County Acres Units Price Per Acre Status
- ------- -------- -------- -------------- -------------------
Bay 24.0 320 $158,333 Closed
Bay 42.3 300 38,636 Under Contract
Bay 14.7 144 68,581 Under Contract
Bay 19.0 240 101,053 Contract In Process
Bay 15.8 158 58,036 Under Contract
Leon 18.0 240 133,333 Under Contract
-------- -------- --------------
Total/
Average 133.8 1,402 $87,305
======== ======== ==============
"With the growing amount of condominium development in the Panama
City Beach area, multifamily products provide access to a more
affordable housing option to citizens in this market," said Twomey.
Northwest Florida
WaterColor Crossing
On January 14, 2004, a new 28,800-square-foot Publix Super Market
opened at WaterColor Crossing, WaterColor's commercial village. Also
in the first quarter, construction was completed on an additional
14,400 square feet of retail space at WaterColor Crossing. The new
space, which is 50 percent leased, is being marketed by Advantis. Two
additional retail parcels are also available for sale in the project.
Highland Commons
During the first quarter of 2004, The Home Depot began
construction of a new store on a 13-acre retail development site in
Highland Commons, near Beckrich Office Park, on land purchased from
JOE in the fourth quarter of last year. The Home Depot is stimulating
demand among retail and multifamily residential users for the
remaining 86 acres in Highland Commons. Current plans include an
additional 13 parcels designed for retail users and 4 parcels designed
for multifamily use.
Pier Park
On April 19, 2004, JOE and Simon Property Group, Inc. (NYSE:SPG)
announced they had agreed in principle for JOE to sell to Simon land
to develop a retail lifestyle center at Pier Park, the public/private
commercial development in Panama City Beach.
Under the terms of the Letter of Intent, Simon would initially
purchase approximately 90 acres in Pier Park. Simon also has the
option to purchase an additional 125 acres from JOE. JOE will retain
approximately 15 acres on the north side of Front Beach Road for
future complementary hospitality development. Simon and JOE are
currently negotiating the terms of a definitive agreement.
"The opportunities in Panama City Beach and Bay County are
improving very quickly, and as a result, we are seeing higher demand
and increasing interest from national retailers," said Twomey. "Simon,
one of the best in the retail development business, can help make Pier
Park a regional destination."
"We are pleased that the nation's premier retail developer has
chosen Pier Park as its next major development project," said Twomey.
"Together we are moving forward as quickly as possible to attract more
exciting opportunities for Panama City Beach and Pier Park. As more
and more retailers gain an appreciation of the unique qualities of
this community, and as the demographics of the visitor base continues
to evolve, opportunities are fast becoming realities."
Pier Park is a public/private revitalization project between JOE
and the City of Panama City Beach. Plans call for more than one
million square feet of retail, dining and entertainment venues set
within 130 acres.
Beckrich Office Park
In January 2004, JOE broke ground on a 30,000-square-foot building
to house 400 additional employees for Nextel Partners. The new
building is located adjacent to Nextel's existing 67,500-square-foot
customer care center with approximately 600 employees. The new
facility is expected to be completed by July 2004.
SouthWood Town Center
On April 13, 2004, JOE broke ground on the first two buildings in
SouthWood Town Center totaling 46,000 square feet of commercial space.
Tenants will include the Tallahassee YMCA, which will feature an
upscale full-service health and fitness center. The buildings were
designed to accommodate restaurants and other retail users. Office
space ranging from 900 to 2,000 square feet will also be available.
Commerce Parks
JOE has 10 commerce parks operating or under development in six
Northwest Florida counties. During the first quarter, commercial land
sales within the commerce parks totaled $0.3 million. With master
plans that were created to transfer value from the frontage of major
highways inland, JOE is adding value to interior timberlands.
Infrastructure construction has started at the South Walton
Commerce Park. Sales are expected to begin in the fourth quarter.
Beach Commerce Park continues to see significant improvement in
land values. During the first quarter, pricing exceeded $80,000 per
acre for interior parcels. Infrastructure construction in phase two of
Beach Commerce Park is expected to begin by the end of the year.
Only two business sites remain in phase 1 of the Port St. Joe
Commerce Park. Infrastructure construction and sales in phase 2 are
expected to begin in the third quarter.
Table 8 summarizes the status of JOE's commerce parks throughout
Northwest Florida at March 31, 2004.
Table 8
Commerce Parks
March 31, 2004
Net Acres Sold/
Saleable Under Current Asking
Commerce Parks County Acres Contract Price Per Acre
- ------------------ -------- --------- ----------- --------------------
Existing and Under
Construction
Beach Commerce Bay 161 79 $65,000 - 435,000
Port St. Joe
Commerce Gulf 58 51 $45,000 - 50,000
Airport Commerce Leon 40 -- $75,000 - 260,000
Nautilus Court Bay 12 2 $300,000 - 375,000
Hammock Creek
Commerce Gadsden 114 23 $40,000 - 150,000
South Walton
Commerce Walton 39 -- $150,000 - 435,000
Predevelopment
Beach Commerce II Bay 115 -- $70,000 - 80,000
Port St. Joe
Commerce II Gulf 50 -- $50,000 - 75,000
Cedar Grove
Commerce Bay 100 -- $35,000 - 45,000
Apalachicola
Commerce Franklin 50 -- $30,000 - 35,000
--------- ----------- --------------------
Total 739 155 $30,000 - 435,000
========= ===========
Investment Property Portfolio
JOE has redeployed the proceeds of its land sales in a
tax-deferred manner through the acquisition of commercial office
buildings in select markets within the southeastern United States. In
the first quarter of 2004, JOE acquired two Florida office buildings,
245 Riverside, the company's corporate headquarters in Jacksonville,
and Beckrich Office Two, in Panama City Beach, into the portfolio.
At March 31, 2004, JOE's portfolio of commercial office buildings
acquired through the capital redeployment program totaled 2.4 million
square feet and represented an aggregate investment of more than $328
million, compared to 1.6 million square feet and an aggregate
investment of $219 million at March 31, 2003.
Table 9 summarizes the investment property portfolio at March 31,
2004.
Table 9
Investment Property Portfolio
March 31, 2004
Number of Net Rentable Leased
Location Properties Square Feet Percentage
- ------------------------ ------------ ---------------- ---------------
Florida
Tampa 5 476,000 84%
Orlando 2 313,000 65%
Jacksonville 1 136,000 46%
Northwest Florida 3 155,000 68%
Atlanta 5 863,000 87%
Washington, D.C. 2 271,000 94%
Charlotte 1 158,000 100%
------------ ---------------- ---------------
Total/Weighted Average 19 2,372,000 82%
============ ================ ===============
Development Properties Portfolio
Table 10 summarizes the development property portfolio at March
31, 2004.
Table 10
Development Property Portfolio
March 31, 2004
Net
Rentable
Market Ownership Square Leased
Property Location Percentage Feet Percentage
- ------------------------ ------------ ---------- ---------- ----------
TNT Logistics Jacksonville 100% 99,000 96%
Alliance Bank Orlando 50% 71,000 76%
Deerfield Commons I Atlanta 40% 122,000 77%
Westchase Corporate Houston 93% 184,000 94%
---------- ----------
Total/Weighted Average 476,000 86%
========== ==========
Advantis
Advantis, JOE's commercial real estate services unit, showed
significant improvement compared to the first quarter of 2003. "In the
first quarter of 2004, brokerage revenue doubled compared to the
comparable period last year," said Twomey. "At the quarter's end, the
brokerage pipeline is also much stronger than it was last year."
Pretax income was $0.3 million before elimination of inter-company
profits of $0.4 million. Advantis had a pretax loss of $1.1 million
for the first quarter of 2003, before elimination of inter-company
profits of $0.5 million.
ST. JOE LAND COMPANY
St. Joe Land Company, JOE's land sales division, had pretax income
from continuing operations of $18.8 million in the first quarter of
2004, compared with pretax income of $17.6 million in the first
quarter of 2003. There were no conservation land sales in the first
quarter of 2004. Pretax income from conservation land sales was $13.1
million in the first quarter of 2003.
"Our land division had an excellent first quarter," said Twomey.
"We were particularly pleased that this division's transactions were
well balanced by land type and location."
An 866-acre parcel in Bay County was sold in the first quarter for
$10.0 million, or approximately $11,550 per acre. Prices per-acre
varies with the mix of parcels sold in any quarter.
"Overall demand for rural land is very strong," said Twomey. "We
are finding an increasing number of potential buyers from outside the
two-hour drive radius that has traditionally been our core market."
"The internet has become an increasingly important marketing
tool," said Twomey. "With strategically placed Web marketing, our
average Web site (www.stjoeland.com) visits per day have increased
from 500 to 1,300. We are updating our Web site with better
presentation and search tools as well as additional land inventory."
Table 11 summarizes St. Joe Land sales activity for the first
quarter of 2004 and first quarter of 2003.
Table 11
St. Joe Land Company Sales
Quarter Ended March 31
Average Gross Sales Gross Profit
Number Number of Price Per Price (in
Period of Sales Acres Acre (in millions) millions)
- -------- --------- ----------- ------------ ------------- ------------
2004 47 7,968 $2,836 $22.6 $20.4
2003 39 3,850 $1,922 $7.4 $6.0
Land Sales
Rural Communities
Entitlement work continued on several rural communities in
Northwest Florida. WaterMill in Gulf County is being designed for the
local market with 120 home sites on 93 acres. Walton Corners in Leon
County is in the entitlement stage and includes 33 home sites on
approximately 60 acres. Cutter Ridge in Franklin County is being
designed for the local market with 83 home sites on 30 acres, in three
phases. Phase 1, a 10-acre parcel, consists of 25 home sites with
prices expected to range from $16,000 to $22,000. Infrastructure for
RiverSide in Calhoun County is currently under construction and will
feature 13 home sites on 362 acres along the Chipola River. JOE plans
to provide home sites to meet the needs of area residents and
residential contractors.
RiverCamps
In the first quarter, there were no releases of home sites in
RiverCamps on Crooked Creek in Bay County. However, strong home site
resale activity indicates that demand remains very high.
RiverCamps on Crooked Creek is the first of a series of planned
settlements in a rustic setting offering personal retreats in a
private woodland preserve. RiverCamps home sites are being sold
fee-simple, with a common area preserved for conservation. Many home
sites are almost one acre, and some are larger.
Locations and prices for the second release of home sites are
expected in the second quarter with closings to follow in the second
half of 2004.
Approved for up to 450 home sites on 1,500 acres of former
timberland, RiverCamps on Crooked Creek features views of West Bay,
the Intracoastal Waterway and Crooked Creek. A variety of RiverCamp
floor plans, typically from 1,500 to 2,400 square feet, are available.
In the first quarter, Southern Living magazine announced the
selection of RiverCamps on Crooked Creek as the location for its 2004
Idea House. The home will be featured in the August 2004 issue of the
magazine. The home will be open for public tours from June 5, 2004,
until after Labor Day.
The 2004 Southern Living Idea House features an open floor plan
with 2,054 square feet of air-conditioned space and 1,577 square feet
of porches and decks. Designed by noted San Antonio architectural firm
Lake Flato, the Southern Living Idea House features a master suite and
two guest bedrooms, 3 1/2 baths, a mud room, a tent room, a summer
kitchen, a recreation room, a screened living porch, an outdoor shower
and covered boat storage.
Planning and evaluation continues on RiverCamps on Sandy Creek in
Bay County. Preliminary plans call for approximately 600 units on
7,000 acres. Work also continues on other potential RiverCamps
locations in Northwest Florida.
Ranches and Farmsteads
JOE's ranch concept has evolved into two distinct products,
ranches with more than 75 acres and farmsteads with approximately 5 to
15 acres.
"Here is another example of the value creation process at work,"
said Twomey. "We continue to find ways to find higher and better uses
for our former timberland. As we better understand the land and how
forest management practices can transform it, we now have two real
estate products. With this refinement, we can provide a better
targeted product for two different kinds of buyers at substantially
higher values than for timberland."
Planning and forest management work continued in the first quarter
for both ranches and farmsteads. Each product line provides buyers
with controls on how the property around them is used. They are
initially being planned in rural settings in Leon, Wakulla and Gadsden
Counties. These sites will benefit from a proximity to Tallahassee and
the agricultural and recreational nature of adjoining properties.
Project improvements include clearing, fencing, road stabilization
and entry features. Each ranch or farmstead is to be sold with common
restrictions designed to promote a sense of community as each owner
finishes their property. Additional land management services will be
available to ranch owners on a separate fee basis. Work also continues
to bring the ranch and farmstead offerings to other parts of JOE's
holdings in Northwest Florida.
Prices of individual tracts are expected to vary depending on the
physical attributes of each site, including timber stands, topography
and proximity to rivers, creeks and bays.
Conservation Land
There were no conservation land sales in the first quarter of
2004.
During the first quarter, contracts were accepted for the sale of
two conservation parcels. A contract was accepted for the 1,605 acre
Short and Crooked Creek parcels in Liberty and Gadsden Counties for
approximately $1,450 per acre. The State of Florida, with the
assistance of The Nature Conservancy, is expected to close these
additions to the Torreya State Park transaction in the second quarter
of 2004. A contract was also accepted from the State of Florida for
153 acres in Wakulla County for approximately $2,500 per acre for an
addition to the Ochlockonee River State Park. The transaction is
expected to be completed in the second quarter of 2004.
Activity is currently underway to sell an additional six parcels
in 2004, totaling approximately 59,000 acres, to state and private
conservation interests. "This includes two large conservation land
sales of approximately 43,000 and 10,000 acres targeted to close later
in the year," said Twomey. Additionally, seven tracts totaling more
than 71,000 acres are being considered for sale in years 2005 and
2006. The timing, sequence and viability of these transactions are
uncertain and some transactions could be delayed or cancelled.
FORESTRY
Pretax income from continuing operations for the forestry segment
totaled $2.7 million for the first quarter of 2004, compared with $1.9
million in the comparable 2003 period. "We are seeing stronger demand
for our chip and saw products," said Twomey.
FINANCIAL DATA
Other Income (Expense)
Other income (expense), which includes dividend and interest
income, gains (losses) on sales of investments and non-operating
assets and miscellaneous income, and interest expense, was an expense
of $2.5 million in the first quarter of 2004, compared to expense of
$2.3 million in the comparable 2003 period.
Table 12 summarizes other income (expense) for the first quarter
and year 2004 and 2003.
Table 12
Other Income (Expense)
(in millions)
Quarter Ended March 31,
-----------------------
2004 2003
----------- -----------
Dividend and interest income $0.1 $0.2
Interest expense (3.3) (3.2)
Other 0.7 0.7
----------- -----------
Total $(2.5) $(2.3)
=========== ===========
EBITDA
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for the first quarter of 2004 were $35.5 million, or $0.46
per share, compared to $34.4 million, or $0.44 per share, in the first
quarter of 2003.
Table 13 provides a reconciliation of net income to EBITDA for the
first quarters of 2004 and 2003.
Table 13
Reconciliation of Net Income to EBITDA
(in millions)
Quarter Ended March 31,
-----------------------
2004 2003
----------- -----------
Net Income $13.1 $14.4
Plus:
Income tax expense 8.3 8.7
Depreciation and amortization 9.4 6.6
Interest expense 4.8 4.7
Minority interest (0.1) --
----------- -----------
EBITDA $35.5 $34.4
=========== ===========
EBITDA per diluted share $0.46 $0.44
=========== ===========
Weighted average diluted shares outstanding 77,731,088 78,333,833
We use EBITDA as a supplemental performance measure, along with
net income, to report our operating results. The company's management
believes EBITDA is an important metric commonly used by companies in
the real estate industry for comparative performance purposes. EBITDA
is not a measure of operating results or cash flows from operating
activities as defined by generally accepted accounting principles
(GAAP). Additionally, EBITDA is not necessarily indicative of cash
available to fund cash needs and should not be considered as an
alternative to cash flows as a measure of liquidity. However, we
believe that EBITDA provides relevant information about our operations
and, along with net income, is useful in understanding our operating
results.
Prior-year EBITDA has been changed to conform to the SEC's current
guidance on non-GAAP financial measures. EBITDA includes conservation
land EBITDA of $(0.1) million in 2004 and $13.1 million in 2003.
Table 14
Summary Balance Sheet
(in millions)
March 31, 2004 March 31, 2003
-------------- --------------
Assets
Investment in real estate $919.7 $823.4
Cash and cash equivalents 51.3 66.8
Prepaid pension asset 93.2 92.1
Property, plant and equipment 36.3 44.0
Other assets 154.7 165.4
-------------- --------------
Total assets $1,255.2 $1,191.7
============== ==============
Liabilities and Stockholders' Equity
Debt $379.1 $334.1
Accounts payable, accrued liabilities 157.2 154.4
Deferred income taxes 238.2 219.2
-------------- --------------
Total liabilities 774.5 707.7
Minority interest 6.0 5.3
Total stockholders' equity 474.7 478.7
-------------- --------------
Total liabilities and stockholders'
equity $1,255.2 $1,191.7
============== ==============
Table 15
Debt Schedule
(in millions)
March 31, 2004 March 31, 2003
-------------- --------------
Revolving debt facility $45.0 $--
Medium term notes 175.0 175.0
Acquisition and other debt 15.3 4.0
Other collateralized/specific asset
related debt 143.8 155.1
-------------- --------------
Total Debt $379.1 $334.1
============== ==============
Table 16
Consolidated Quarterly Comparisons
($ in millions except per share amounts)
Quarter Ended March 31,
-----------------------
2004 2003
----------- -----------
Revenues:
Real estate sales $135.7 $114.1
Realty revenues 19.1 12.3
Timber sales 9.9 9.6
Rental revenue 11.9 9.5
Other revenues 7.4 4.7
----------- -----------
Total revenues 184.0 150.2
----------- -----------
Expenses:
Cost of real estate sales 90.5 65.3
Cost of realty revenues 10.7 6.7
Cost of timber sales 6.0 6.7
Cost of rental revenue 5.3 3.9
Cost of other revenues 6.5 5.2
Other operating expenses 23.6 20.4
Corporate expense, net 8.9 6.0
Depreciation and amortization 9.2 6.6
----------- -----------
Total expenses 160.7 120.8
----------- -----------
Operating profit 23.3 29.4
Other income (expense) (2.5) (2.3)
----------- -----------
Pretax income from continuing operations 20.8 27.1
Income tax expense ( 8.3) (8.7)
Minority interest (expense) income (0.1) (0.3)
Equity in income (loss) of unconsolidated
affiliates(a) 0.7 (3.7)
----------- -----------
Net income $13.1 $14.4
=========== ===========
Net income per diluted share $0.17 $0.18
=========== ===========
EBITDA(b) $35.5 $34.4
=========== ===========
EBITDA per diluted share(b) $0.46 $0.44
=========== ===========
Weighted average diluted shares outstanding 77,731,088 78,333,833
(a) Reformatted to reflect equity in income (loss) of unconsolidated
affiliates separately from revenues. Previously the Company
recorded equity in unconsolidated affiliates as a component of
revenues in the community development segment ($3.9 million loss
in the first quarter 2003) and commercial real estate segment
($0.2 million in the first quarter 2003). For the first quarter
of 2004, equity in income (loss) of unconsolidated affiliates was
$1.1 million in the community residential segment and a loss of
$0.4 million in the commercial real estate segment.
(b) See Table 13 above for a reconciliation of net income to EBITDA.
Table 17
Quarterly Revenues
By Segment(a)
(in millions)
Quarter Ended March 31,
-----------------------
2004 2003
----------- -----------
Community development $105.7 $89.7
Commercial real estate 45.8 27.9
Land sales 22.6 23.0
Forestry 9.9 9.6
Corporate and other -- --
----------- -----------
Total revenues $184.0 $150.2
=========== ===========
(a) Reformatted to reflect equity in income of unconsolidated
affiliates separately from revenues. See footnote to Table 16.
Table 18
Quarterly Segment Income Before
Taxes, Minority Interest and Equity in Income
Of Unconsolidated Affiliates(a)
(in millions)
March Dec Sept June March Dec Sept June
31, 31, 30, 30, 31, 31, 30, 30,
2004 2003 2003 2003 2003 2002 2002 2002
------ ------ ------ ------ ------ ------ ------ ------
Community
development $9.1 $13.2 $32.1 $23.0 $12.4 $19.9 $18.4 $17.9
Commercial
real estate 1.4 6.5 (1.2) (11.1) 3.3 4.6 (0.9) (0.4)
Land sales 18.8 33.2 14.8 12.8 17.6 30.7 8.6 10.5
Forestry 2.7 2.3 1.7 2.2 1.9 2.0 1.7 2.3
Corporate and
other (11.2) (12.2) (12.0) (10.7) (8.1) 28.4 (11.1) (13.7)
------ ------ ------ ------ ------ ------ ------ ------
Income before
income taxes,
minority
interest and
equity in
income of
unconsolidated
affiliates $20.8 $43.0 $35.4 $16.2 $27.1 $85.6 $16.7 $16.6
====== ====== ====== ====== ====== ====== ====== ======
(a) Excludes equity in income of unconsolidated affiliates, previously
reported in operating revenues. See footnote to Table 16.
Conference Call Information
JOE will host an interactive conference call to review the
company's results for the quarter ended March 31, 2004 and discuss
guidance for 2004 on Tuesday, April 20, 2004, at 10:00 AM, Eastern
Daylight Time.
To participate in the call, please phone 888/428-4473 (for
domestic calls from the United States) or 651/291-0900 (for
international calls) approximately ten minutes before the scheduled
start time. Approximately three hours following the call, you may
access a replay of the call by phoning 800/475-6701 (domestic) or
320/365-3844 (international) using access code 726625. The replay will
be available for one week.
JOE will also webcast the conference call live over the internet
in a listen-only format. Listeners can participate by visiting the
company's web site at http://www.joe.com. Access will be available 15
minutes prior to the scheduled start time. A replay of the conference
call will be posted to the JOE web site approximately three hours
following the call. The replay of the call will be available for one
week.
About JOE
The St. Joe Company, a publicly held company based in
Jacksonville, is one of Florida's largest real estate operating
companies. It is engaged in community, resort, commercial and
industrial development, land sales and commercial real estate
services. JOE also has significant interests in timber.
More information about JOE can be found at our web site at
http://www.joe.com.
Forward-Looking Statements
We have made forward-looking statements in this earnings release,
particularly in the Outlook Section. The Private Securities Litigation
Reform Act of 1995 provides a safe-harbor for forward-looking
information to encourage companies to provide prospective information
about themselves without fear of litigation so long as that
information is identified as forward-looking and is accompanied by
meaningful cautionary statements identifying important factors that
could cause actual results to differ, possibly materially, from those
in the information. Any statements in this release that are not
historical facts are forward-looking statements. You can find many of
these forward-looking statements by looking for words such as
"intend", "anticipate", "believe", "estimate", "expect", "plan",
"forecast" or similar expressions. In particular, forward-looking
statements include, among others, statements about the following:
-- the size and number of residential units and commercial
buildings;
-- expected development timetables, development approvals and the
ability to obtain such approvals, including possible legal
challenges;
-- the anticipated price ranges of developments;
-- the number of units that can be supported upon full build out
of a development;
-- the number, price and timing of anticipated land sales or
acquisitions;
-- estimated land holdings for a particular use within a specific
time frame;
-- absorption rates and expected gains on land sales;
-- future operating performance, cash flows, and short and
long-term revenue and earnings growth rates;
-- comparisons to historical projects; and
-- the number of shares of company stock which may be purchased
under the company's existing or future share-repurchase
program.
Forward-looking statements are not guarantees of future
performance. You are cautioned not to place undue reliance on any of
these forward-looking statements. These statements are made as of the
date hereof based on current expectations, and we undertake no
obligation to update the information contained in this release.
Forward-looking statements are subject to numerous assumptions,
risks and uncertainties. Factors that could cause actual results to
differ materially from those contemplated by a forward-looking
statement include the risk factors described in our annual report on
form 10-K for the year ended December 31, 2003 as well as, among
others, the following:
-- economic conditions, particularly in Florida and key southeast
United States areas that serve as feeder markets to the
company's Northwest Florida operations;
-- acts of war, terrorism or other geopolitical events;
-- local conditions such as an oversupply of homes and home sites
and residential or resort properties or a reduction in the
demand for real estate in an area;
-- timing and costs associated with property developments and
rentals;
-- competition from other real estate developers;
-- whether potential residents or tenants consider our properties
attractive;
-- increases in operating costs, including increases in real
estate taxes;
-- changes in the amount or timing of federal and state income
tax liabilities resulting from either a change in our
application of tax laws, an adverse determination by a taxing
authority or court, or legislative changes to existing laws;
-- how well we manage our properties;
-- changes in interest rates and the performance of the financial
markets;
-- decreases in market rental rates for our commercial and resort
properties;
-- changes in the prices of wood products;
-- the pace of development of public infrastructure, particularly
in Northwest Florida;
-- potential liability under environmental laws or other laws or
regulations;
-- adverse changes in laws, regulations or the regulatory
environment affecting the development of real estate;
-- the availability of adequate funding from governmental
agencies and others to purchase conservation lands;
-- fluctuations in the size and number of transactions from
period to period; and
-- adverse weather conditions or natural disasters.
The foregoing list is not exhaustive and should be read in
conjunction with other cautionary statements contained in our periodic
and other filings with the Securities and Exchange Commission.
Copyright 2004, The St. Joe Company. "St. Joe," "JOE," "Advantis,"
"Arvida," "Artisan Park," "Beckrich," "Paseos,""Pier Park,"
"RiverCamps," "RiverTown," "SouthWood," "SummerCamp," "Victoria Park,"
"WaterColor," "WaterSound," "WindMark," and the "taking flight" design
are service marks of The St. Joe Company.
CONTACT: The St. Joe Company, Jacksonville
Media Contact: Jerry M. Ray, 904/301-4430
or
Investor Contact: Steve Swartz, 904/301-4347