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UNITED STATES
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) October 25, 2005
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The St. Joe Company
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(Exact Name of Registrant as Specified in Its Charter)
Florida 1-10466 59-0432511
- ---------------------------- ------------------- --------------------------
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
245 Riverside Avenue, Suite 500
Jacksonville, FL 32202
- ------------------------------------------ ------------------
(Address of Principal Executive Offices) (Zip Code)
(904) 301-4200
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-(c))
ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On October 25, 2005, The St. Joe Company (the "Company") issued a press release
announcing the Company's financial results for the quarter ended September 30,
2005. A copy of the press release is furnished with this Form 8-K as Exhibit
99.1.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
99.1 Press Release dated October 25, 2005
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: October 25, 2005 By: /s/ Michael N. Regan
--------------------------------
Michael N. Regan
Senior Vice President -
Finance and Planning
Exhibit 99.1
The St. Joe Company (NYSE: JOE) Reports Third Quarter 2005 Net Income of $0.47
Per Share, Including $0.08 Per Share Charge for Sale of Advantis; JOE Revises
2005 Full-Year Guidance to $1.70 to $1.85; From $1.80 to $1.95
JACKSONVILLE, Fla.--(BUSINESS WIRE)--Oct. 25, 2005--The St. Joe
Company (NYSE: JOE):
-- JOE's Resort Residential Sales Activity Slowed; Primary Home
Demand and Pricing Strong
-- Commercial Segment Has Record Quarter
-- Panama City - Bay County Airport Authority and JOE Enter into
Land Donation Agreement for Relocation of Airport
The St. Joe Company (NYSE: JOE) today announced that its Net
Income for the third quarter of 2005 was $36.1 million, or $0.47 per
share, compared with $26.3 million, or $0.34 per share, for the third
quarter of 2004. Results for the third quarter include an after-tax
charge of $6.2 million, or $0.08 per share, resulting from the sale of
its subsidiary, Advantis Real Estate Services Company. All per-share
references in this release are presented on a diluted basis.
Net Income for the first nine months of 2005 was $89.4 million, or
$1.17 per share, compared with $62.0 million, or $0.81 per share, for
the first nine months of 2004.
"We are pleased with our third quarter performance," said JOE
chairman and CEO Peter S. Rummell. "While we faced a challenging
resort residential market, our primary communities performed well, St.
Joe Commercial had a record quarter and St. Joe Land Company's rural
land sales were strong. JOE's performance in the third quarter
underscores a point we have been making for some time now: our
flexibility and increasing diversity is a tremendous strength."
"Hurricane Katrina dominated the headlines for a significant part
of the quarter," said Rummell. "For JOE, the news was mixed. On the
one hand, we were very fortunate since there was only minimal storm
damage to JOE property, allowing us to quickly resume normal
operations."
"In fact, the storms may have created some long-term economic
development opportunities for Northwest Florida," said Rummell. "For
example, traffic at the Port of Panama City has increased
significantly as a result of the damage sustained at the Port of New
Orleans. The Port of Panama City is one of the few deep water ports on
the Gulf Coast - and if it is eventually linked with the relocated
airport, Bay County has the potential to become an intermodal
transportation center."
"On the other hand, hurricanes in the third quarter depressed
normal visitor traffic patterns - and consequently demand for resort
residential properties," said Rummell. "Local Northwest Florida
officials have noted a drop-off in tourism during the summer season."
JOE's Resort Residential Sales Activity Slowed
"Recently, activity in our resort residential projects in
Northwest Florida has slowed, although there are some indicators of
continued demand for coastal resort property," said Rummell. "For
example, during September and after Hurricane Katrina made landfall,
we converted 48 non-binding reservations to closed sales at
SummerCamp."
"Looking ahead, given JOE's unique advantages, Florida's strong
demographic drivers and resilient economy, we believe our resort
residential market's long-term prospects remain excellent," said
Rummell.
Strong Market for Primary Housing
"Meanwhile, Florida's primary housing market continues to build
strength," said Rummell. "JOE achieved strong pricing results at
Victoria Park in DeLand, SouthWood in Tallahassee and Palmetto Trace
in Panama City Beach. After softening somewhat in the third quarter,
sales at Artisan Park in Orlando appear to be rebounding as we move
into the fourth quarter. At St. John's Golf & Country Club, just south
of Jacksonville, pricing remains strong as this community nears
build-out. All of these communities have entered the fourth quarter
with significant backlog and earnings potential."
"New residential opportunities are picking up for our commercial
division," said Rummell. "In the third quarter JOE sold four tracts of
entitled land to national and regional multifamily developers,
including Trammell Crow Residential. Trammell Crow's entry into the
Northwest Florida market indicates just how far we've come in terms of
developing the market. We will continue to create such opportunities
for years to come."
Entitlements Progress Builds Value
"The complex, time-consuming process of gaining entitlements in
Florida may be keeping demand ahead of supply in the primary housing
market," said Kevin M. Twomey, JOE's president and COO. "New projects
well into the planning process, such as WestBay Landing, represent
additional opportunities to meet growing market demand."
"We are excited about our progress in getting entitlements to meet
demand for coastal and other Florida properties," said Twomey. "Also,
in late September, we received the final permit on WaterSound required
to commence construction. WindMark Beach, WaterSound, RiverTown and
Perico Island are all moving into position to produce significant
revenue."
"With approximately 34,500 entitlements in hand or in process, JOE
is well-positioned to help meet demand," said Twomey. "More
importantly, we have developed a core competency in getting land
entitled; something we believe will help us create value well into the
future. We continue to work hard to add entitlements for inland
primary housing in order to build inventory across a broad range of
price points."
New Ruralism Products Being Positioned to Capture Interest in
Rural Land
"We are very pleased with the progress we are making with rural
land sales," said Twomey. "St. Joe Land Company had its best quarter
this year in terms of total revenue, income and price-per-acre. The
percentage of buyers from outside the region continued to increase.
Demand for rural recreational land remains strong moving into the
final quarter of the year with good pricing."
"JOE is working to bring a new portfolio of products to market
based on an emerging New Ruralism development philosophy," said
Twomey. "We believe the diversity of our inland holdings and product
offerings is an emerging strength. WhiteFence Farms and Florida
Ranches are moving into position to join RiverCamps as JOE products
that will allow people to live close to the land, but on their own
terms. We will be bringing our first WhiteFence Farms product to
market next year, and we are currently building a 2006 Southern Living
Idea House at WhiteFence Farms, Red Hills near Tallahassee as part of
the product launch."
Short-Term Challenges; Long-Term Opportunities
"It will remain unclear for some time what direct and indirect
impacts the 2005 hurricane season will have on JOE," said Rummell.
"Effects on cost and supply of labor and building materials may impact
our operations in a variety of ways."
"On the positive side, Katrina also brought greater awareness of
the need to focus on regional preparedness," said Rummell.
"Fortunately for Florida, as Governor Jeb Bush testified to Congress
on October 19th, Florida has been the national leader for decades in
policies intended to provide advance warning, safe evacuation,
appropriate building standards and efficient recovery."
"Katrina reminds us why good planning is so important to coastal
living," said Rummell. "It highlights one more reason why the effort
to relocate the Panama City airport to an inland location beyond the
storm surge zone makes so much sense. It also emphasizes the
practicality of moving a segment of U.S. 98 at WindMark Beach, now
well under construction, off the beach and appropriately inland."
"These examples highlight the opportunity JOE and local leaders
have in Northwest Florida to learn from the past and prepare for the
future in a way that may be unprecedented," said Rummell.
"Florida will remain a favorite destination," said Rummell.
"Whatever the 2005 hurricane season's short-term impact on Florida may
be, it pales next to the long-term prospects of the demographic forces
at work in what is one of the nation's most vibrant states - and one
of the strongest, most diversified economies in the world."
An Ironic Situation
"As we enter the fourth quarter, JOE is in an ironic situation,"
said Rummell. "Our stock price is near a recent low, even though
opportunities before us have never been greater. We are at the
culmination of eight years of hard work that will bring the next
generation of JOE towns to market."
"In 2006, we expect WaterSound, Hawks Landing, WindMark Beach,
RiverTown and Perico Island to come to market - with a broad range of
product for primary, retirement and resort living, in different
geographic markets, at a broad range of price points," said Rummell.
"Together, the potential of these towns dwarfs what we have
accomplished at WaterColor and WaterSound Beach."
"And beyond that, our entitlements pipeline is positioned to bring
us even more diversity and flexibility both in the short and long
term," Rummell said. "With all of that potential considered, we must
then factor in the progress being made on the proposed relocation of
the Panama City airport."
"So, JOE is at the threshold of what we believe will be an
extraordinary era of growth and opportunity for JOE shareholders,"
said Rummell.
2005 OUTLOOK
Full Year Earnings Expectations of $1.70-$1.85
"Although JOE properties experienced little direct physical impact
from Hurricane Katrina, third quarter resort residential sales
activity in the region did slow significantly in the weeks following
this hurricane as the world paused to witness the dramatic events
unfolding in Louisiana, Mississippi and Alabama," said JOE's CFO
Anthony M. Corriggio. "Given the near term effects of an active
hurricane season on overall visitor traffic, and resort residential
sales in particular, we currently anticipate that our full year
earnings will be within a range of $1.70 to $1.85. This excludes the
$0.08 after-tax loss on the sale of Advantis."
"The longer term supply and demand fundamentals remain intact for
the wide range of unique development opportunities we're undertaking
in Northwest Florida and across the State," said Corriggio. "We
continue to expect the majority of fourth quarter earnings to come
from our Towns & Resorts segment from a mix of resort and primary
residential communities across multiple geographic locations and
product lines."
Towns & Resorts
"Artisan Park, a primary and second home community at Celebration
near Orlando, is expected to be a significant contributor to JOE's
earnings in the fourth quarter," said Corriggio. "Approximately 130
units under contract are expected to close during the fourth quarter.
Victoria Park, Palmetto Trace and St. Johns Golf & Country Club - all
primary home communities -- are expected to be solid earnings
contributors as well."
"Although we expect WaterColor and WaterSound Beach results to
reflect a more moderate sales pace than we had previously anticipated,
the combined earnings contribution from these two communities is
expected to be higher in the fourth quarter than the third quarter
2005," said Corriggio. "We anticipate building on successful third
quarter sales at SummerCamp with additional releases planned for the
fourth quarter."
"Our expectations for 2005 do not include sales at four major
projects we plan to bring to market in 2006: WindMark Beach,
WaterSound, RiverTown and Perico Island," said Corriggio.
Commercial Real Estate
"We expect another strong quarter from JOE's Commercial segment in
the fourth quarter," said Corriggio. "The pipeline of commercial land
sales scheduled to close in the quarter is again solid and diverse.
Transactions are expected to occur across the spectrum of product
types, including land parcels entitled for retail, office, light
industrial, apartments and condominium development. Several of these
transactions are somewhat sizeable with closings scheduled for late in
the fourth quarter."
"Overall, we expect fourth quarter earnings from commercial land
sales activity to meet or exceed the level realized in the third
quarter," said Corriggio. "Also, as described last quarter, we expect
the sale of one additional office building from our investment
property portfolio to close prior to the end of the year."
St. Joe Land Company
"The fourth quarter should see RiverCamps at Crooked Creek
delivering meaningful income from prior releases, with additional
units planned to be released and closed prior to the end of the year,"
said Corriggio. "The latest release of 40 units is currently in the
market. We anticipate rural land sales activity during the quarter to
be relatively in line with the third quarter, along with commensurate
income generation."
CREDIT FACILITY AND SENIOR NOTES
On July 22nd, JOE closed a new four-year $250 million revolving
credit facility. The new facility provides more favorable terms and
interest rates than the previous facility.
On August 25th, JOE closed a $150 million offering of 10, 12, and
15 year senior notes issued in a private placement with a weighted
average fixed coupon of 5.35 percent.
DIVIDENDS AND STOCK REPURCHASE PROGRAM
A quarterly cash dividend of $0.16 per share of common stock was
paid on September 30th to shareholders of record at the close of
business on September 15, 2005. This represents an increase of
approximately 14.3 percent over the dividend of $0.14 per share paid
in each of the previous four quarters.
On September 30th, 75,680,606 JOE shares were outstanding. The
number of weighted-average diluted shares in the third quarter of 2005
was 76,089,307.
During the third quarter of 2005, JOE expended an aggregate of
$32.8 million for dividends and the acquisition of its shares. JOE
acquired 266,300 of its shares at a cost of $20.8 million, an average
price of $77.89 per share, during the third quarter. On September
30th, approximately $59.8 million remained of the company's current
stock repurchase authorization.
Table 1 summarizes the company's stock repurchase activity from
1998 through September 30, 2005.
Table 1
Stock Repurchase Activity
Through September 30, 2005
Shares
-----------------------------------
Total
Surrendered Cost (in Average
Period Purchased (1) 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 3,517,066 -- 3,517,066 80.2 22.78
2001 7,071,300 58,550 7,129,850 176.0 24.67
2002 5,169,906 256,729 5,426,635 157.6 29.03
2003 2,555,174 812,802 3,367,976 102.9 30.55
2004 1,561,565 884,633 2,446,198 105.0 42.90
2005 842,400 61,203 903,603 68.0 75.21
----------- ----------- ----------- --------- ---------
Total/Weighted
Average 26,134,811 2,097,697 28,232,508 $ 814.8 $ 28.83
=========== =========== =========== ========= =========
(1) Shares surrendered by company executives as payment for the strike
price and taxes due on exercised stock options or taxes due on the
vesting of restricted stock.
"We continue to view our dividend and repurchase program as an
important contributor to shareholder value," said Corriggio. "As of
September 30th, the total amount of capital distributed to
shareholders in 2005 via share repurchases and dividends was
approximately $101.4 million."
"We previously set our benchmark at $125 million to $175 million
for this program for the full-year 2005," said Corriggio. "During the
remainder of the year, we intend to target the high-end of this range
by more aggressively repurchasing stock."
ENTITLEMENTS
On September 30th, JOE owned approximately 850,000 acres,
concentrated primarily in Northwest Florida. These holdings included
approximately 345,000 acres within 10 miles of the coast of the Gulf
of Mexico and approximately 505,000 acres outside the 10-mile coastal
perimeter, including approximately 50,000 acres in southwest Georgia.
"Developers nationwide consider land acquisition and gaining
entitlements to be the two biggest challenges they face," said Twomey.
"JOE is fortunate to own a tremendous amount of high-quality,
low-basis land. And over the past eight years, we have built a core
competency in Florida's land planning and entitlements process. We
currently have land use entitlements for approximately 34,500 units in
hand or in process, with each representing significant future value."
"During the third quarter, JOE sold four tracts of entitled land
to national and regional multifamily developers," said Twomey. "These
entitled parcels, which were added to Table 2 in the second quarter of
2005, illustrate the demand for multifamily land in Northwest Florida.
Sales of multifamily land are another example of how JOE is increasing
the sales absorption of residential land holdings as well as expanding
the housing options in Bay County."
"We received final permits to commence construction at WaterSound
on September 28th, marking an even more important entitlements
milestone," said Twomey. "Permits have been received this year for
SummerCamp, WindMark Beach and now WaterSound, so that construction is
now underway on the next generation of JOE Northwest Florida
projects."
JOE submitted a zoning request in the third quarter for the
WestBay Landing, marking the first development activity in the West
Bay Area Sector Plan. This new community is being planned for 685
units on 1,115 acres.
Table 2 summarizes JOE's Florida residential projects with
land-use entitlements as of September 30th. This table includes
multifamily projects, which are marketed by our commercial group.
Table 2
Summary of Land-Use Entitlements (1)
JOE Residential Projects in Florida
September 30, 2005
Project Project
Project County Acres Units(2)
- ---------------------- -------------- ---------- ----------
In Development:(3)
- ----------------------
Artisan Park(4) Osceola 175 616
Bridgeport Gulf 15 37
Cutter Ridge Franklin 10 25
Landings at Wetappo Gulf 113 16
Palmetto Trace Bay 141 481
Paseos(4) Palm Beach 175 325
RiverCamps on Crooked
Creek Bay 1,491 408
Rivercrest(4) Hillsborough 413 1,382
RiverSide at Chipola Calhoun 120 10
SouthWood(5) Leon 3,370 4,770
St. Johns Golf &
Country Club St. Johns 820 799
The Hammocks Bay 133 457
SummerCamp Franklin 762 499
Victoria Park Volusia 1,859 4,200
Walton Corners Leon 60 32
WaterColor Walton 499 1,140
WaterSound Beach Walton 256 511
WaterSound West Beach Walton 62 199
WaterSound Walton 1,402 1,330
WindMark Beach Gulf 2,020 1,662
---------- ----------
Subtotal 13,896 18,899
---------- ----------
In Pre-Development:(3)
- ----------------------
Bayview Estates Gulf 13 52
Boggy Creek Bay 630 1,260
Camp Creek Golf
Cottages Walton 10 50
East Lake Powell Bay 181 360
Glades Bay 26 360
Hammocks at St. Joseph
Bay Gulf 56 18
Hawks Landing Bay 88 167
Hills Road Bay 30 356
Long Avenue Gulf 22 52
ParkPlace (Osprey
Landing) Bay 118 250
Perico Island(6) Manatee 352 686
Pier Park Timeshare Bay 13 125
Port St. Joe Millsite
Area(7) Gulf 170 598
Powell Adams Bay 32 1,425
RiverCamps on Sandy
Creek Bay 6,500 624
RiverTown St. Johns 4,170 4,500
Sunnyside Bay 22 216
Timber Island(8) Franklin 49 458
Topsail Walton 115 627
Wavecrest Bay 7 95
WestBay Landing Bay 1,115 685
WhiteFence Farms, Red
Hills Leon 373 35
Woodrun Bay 10 46
---------- ----------
Subtotal 14,102 13,045
---------- ----------
Total 27,998 31,944
========== ==========
Units
Units Under
Closed Contract Total
Since as of Units
Project County Inception 9/30/05 Remaining
- ---------------------- -------------- ---------- ---------- ----------
In Development:(3)
- ----------------------
Artisan Park(4) Osceola 176 279 161
Bridgeport Gulf 31 5 1
Cutter Ridge Franklin -- -- 25
Landings at Wetappo Gulf -- -- 16
Palmetto Trace Bay 323 70 88
Paseos(4) Palm Beach 228 95 2
RiverCamps on Crooked
Creek Bay 169 -- 239
Rivercrest(4) Hillsborough 911 464 7
RiverSide at Chipola Calhoun 2 1 7
SouthWood(5) Leon 1,401 129 3,240
St. Johns Golf &
Country Club St. Johns 695 45 59
The Hammocks Bay 395 53 9
SummerCamp Franklin 48 -- 451
Victoria Park Volusia 759 183 3,258
Walton Corners Leon -- 32 --
WaterColor Walton 854 9 277
WaterSound Beach Walton 391 10 110
WaterSound West Beach Walton 6 2 191
WaterSound Walton -- -- 1,330
WindMark Beach Gulf 104 -- 1,558
---------- ---------- ----------
Subtotal 6,493 1,377 11,029
---------- ---------- ----------
In Pre-Development:(3)
- ----------------------
Bayview Estates Gulf -- -- 52
Boggy Creek Bay -- -- 1,260
Camp Creek Golf
Cottages Walton -- -- 50
East Lake Powell Bay -- -- 360
Glades Bay 240 120 --
Hammocks at St. Joseph
Bay Gulf -- -- 18
Hawks Landing Bay -- 83 84
Hills Road Bay -- -- 356
Long Avenue Gulf -- -- 52
ParkPlace (Osprey
Landing) Bay -- -- 250
Perico Island(6) Manatee -- -- 686
Pier Park Timeshare Bay -- -- 125
Port St. Joe Millsite
Area(7) Gulf -- -- 598
Powell Adams Bay -- -- 1,425
RiverCamps on Sandy
Creek Bay -- -- 624
RiverTown St. Johns -- -- 4,500
Sunnyside Bay 216 -- --
Timber Island(8) Franklin -- -- 458
Topsail Walton -- -- 627
Wavecrest Bay -- -- 95
WestBay Landing Bay -- -- 685
WhiteFence Farms, Red
Hills Leon -- -- 35
Woodrun Bay 46 -- --
---------- ---------- ----------
Subtotal 502 203 12,340
---------- ---------- ----------
Total 6,995 1,580(9) 23,369
========== ========== ==========
(1) A project is deemed land-use entitled when all major discretionary
governmental land-use approvals have been received. Some of these
projects may require additional permits for development and/or
build-out; they also may be subject to legal challenge.
(2) Project units represent the maximum number of units entitled or
currently expected at full build-out. The actual number of units
to be constructed at full build-out may be lower than the number
entitled or currently expected.
(3) A project is "in development" when construction on the project has
commenced. A project in "pre-development" has land-use
entitlements but is still under internal evaluation or requires
one or more additional permits prior to the commencement of
construction.
(4) Artisan Park is 74 percent owned by JOE. Paseos and Rivercrest are
each 50 percent owned by JOE.
(5) Includes 480 entitled multifamily units that were sold to third
party developers.
(6) JOE has an option to purchase the land for this project.
(7) A 126-acre parcel within this project is owned by a joint venture
of which JOE is a 50 percent owner and managing partner.
(8) Timber Island entitlements include 58 residential units and 400
units for hotel or other transient uses (including units held with
fractional ownership such as private residence clubs) and include
480 wet/dry marina slips.
(9) Excludes our Mid-Atlantic region that includes activity in North
Carolina and South Carolina where we are primarily engaged in
homebuilding, and not in obtaining entitlements. As of September
30, 2005, the Mid-Atlantic region had 284 housing units under
contract.
Table 3 summarizes JOE's Florida residential projects in the
entitlements process as of September 30th.
Table 3
Proposed JOE Residential Projects
In the Land-Use Entitlement Process in Florida (1)
September 30, 2005
Estimated
Project Project
Project County Acres Units(2)
- --------------------------------- -------------- ---------- ----------
Bonfire Beach Bay 524 1,048
Carrabelle East Franklin 200 600
College Station Bay 567 1,325
Songbird Wakulla 9 90
St. James Island McIntyre Franklin 1,704 340
St. James Island RiverCamps Franklin 2,500 500
St. James Island Granite Point Franklin 1,000 2,000
WestBay DSAP Future Phases (3) Bay 4,836 5,157
Wetappo Creek Gulf 10 39
---------- ----------
Total 11,350 11,099
========== ==========
(1) All projects listed have significant entitlement steps remaining
that could affect timing, scale and viability. There can be no
assurance that these entitlements will ultimately be received.
(2) The actual number of units to be constructed at full build-out may
be lower than the number ultimately entitled.
(3) Any development in future phases of the West Bay DSAP is
conditioned upon the encumbrance of mitigation lands for the
proposed relocation of the Panama City-Bay County International
Airport.
WESTBAY
Panama City - Bay County International Airport Relocation
On September 29, 2005, the Panama City Bay County Airport and
Industrial District (Airport Authority) voted to enter into a land
donation agreement with JOE for approximately 14,000 acres in
northwestern Bay County for a proposed new airport site and an
associated environmental mitigation area. Upon meeting the agreement's
specified conditions, JOE has committed to donate a 4,000-acre airport
relocation site and a conservation easement for 9,858 acres to be a
part of the WestBay Preservation Area.
If for any reason the new airport is not built or not placed into
service within specified time periods, the land for the airport and
the conservation area would revert to JOE. The agreement is subject to
the approval of the Federal Aviation Administration (FAA).
The conservation easement for the airport represents the beginning
of an unprecedented effort designed to protect nearly the entire
shoreline of West Bay.
"We are pleased with the progress being made on the proposed
relocation of the Panama City - Bay County International Airport to
WestBay," said Rummell. The Airport Authority recently indicated that
the FAA plans to release its final Environmental Impact Statement
(EIS) later this year and to issue its Record of Decision (ROD) early
next year.
"The Airport Authority has also started a process to sell the land
at the current airport location," said Rummell. "We consider that a
significant positive step."
A number of additional steps remain before construction of the
airport can begin, including approval of the U.S. Army Corps of
Engineers and other federal, state and local regulatory agencies as
well as funding from federal, state and Airport Authority sources.
SEGMENT RESULTS
ST. JOE TOWNS & RESORTS
Pretax income from continuing operations for St. Joe Towns &
Resorts, JOE's residential and resort development segment, was $25.6
million for the third quarter this year, compared with $31.8 million
in the third quarter last year, in each case excluding income from
unconsolidated affiliates.
In the third quarter, St. Joe Towns & Resorts closed on the sales
of 616 units and generated revenues from housing and home sites of
$156.1 million, compared to 471 units and $153.5 million in revenue in
the third quarter of 2004. JOE accepted contracts for 492 units in the
third quarter of 2005, compared to 550 units in the third quarter a
year ago.
Overall, gross profit margins have decreased in the third quarter
of 2005, compared with the third quarter of 2004, as sales in higher
margin resort communities have decreased while sales in lower margin
primary home communities have increased. In addition, the majority of
profit on multifamily closings occurring this quarter was recognized
in previous quarters due to percentage of completion accounting.
Tables 4 and 5 summarize sales activity for St. Joe Towns &
Resorts for the third quarters of 2005 and 2004.
Table 4
St. Joe Towns & Resorts
Sales Activity
For the Three Months
Ended September 30,
($ in millions)
2005
-------------------------------------------
Number of
Units Cost of Gross
Closed Revenue Sales(1) Profit
-------------------------------------------
Home Sites(2) 113 $ 21.2 $ 5.5 $ 15.7
Homes(3) 503 134.9 111.8 23.1
---------- ---------- ---------- ----------
Total 616 $ 156.1 $ 117.3 $ 38.8
========== ========== ========== ==========
2004
-------------------------------------------
Number of
Units Cost of Gross
Closed Revenue Sales(1) Profit
-------------------------------------------
Home Sites(2) 95 $ 25.6 $ 7.0 $ 18.6
Homes (3) 376 127.9 103.2 24.7
---------- ---------- ---------- ----------
Total 471 $ 153.5 $ 110.2 $ 43.3
========== ========== ========== ==========
(1) Cost of sales for home sites in the third quarter of 2005
consisted of $8.4 million in direct costs, $1.3 million in selling
costs and $1.1 million in indirect costs. Cost of sales for home
sites in the third quarter of 2004 consisted of $5.1 million in
direct costs, $1.2 million in selling costs and $0.7 million in
indirect costs. Cost of sales for homes in the third quarter of
2005 consisted of $94.8 million in direct costs, $7.0 million in
selling costs and $10.0 million in indirect costs. Cost of sales
for homes in the third quarter of 2004 consisted of $86.8 million
in direct costs, $7.1 million in selling costs and $9.3 million in
indirect costs.
(2) Percentage of completion accounting is utilized at SummerCamp and
WaterSound West Beach. As a consequence, revenue recognition and
closings may occur in different periods.
(3) Homes include single family, multifamily and Private Resident Club
(PRC) units. Multifamily and PRC revenue is recognized, if
preconditions are met, on a percentage-of-completion basis. As a
consequence, revenue recognition and closings may occur in
different periods. Paseos and Rivercrest, two joint ventures 50
percent owned by JOE, are not included. Sales are complete or
nearly complete at both communities.
Table 5
St. Joe Towns & Resorts
Units Placed Under Contract
For the Three Months
Ended September 30,
Percentage
2005 2004 Change
---------- ---------- ----------
Home Sites 105 87 20.7 %
Homes(1) 387 458 (15.5)
---------- ---------- ----------
Total(2) 492 545 (9.7) %
========== ========== ==========
(1) Homes include single family homes, multifamily and PRC units. Some
home sites are offered for sale with a home to be constructed by
JOE.
(2) Paseos and Rivercrest, two joint ventures, are not included.
Paseos and Rivercrest had only 1 unit placed under contract during
the third quarter of 2005, compared to 240 units at the end of the
third quarter of 2004. Sales are complete or nearly complete at
both communities.
Table 6 summarizes backlog at September 30, 2005 and 2004.
Table 6
St. Joe Towns & Resorts
Backlog (1)
($ in millions)
September 30, 2005 September 30, 2004
---------- ---------- ---------- ----------
Units Revenues Units Revenues
---------- ---------- ---------- ----------
Home Sites 23 $ 4.6 20 $ 1.8
Homes(2) 1,041 351.9 1,104 369.5
---------- ---------- ---------- ----------
Total 1,064 $ 356.5 1,124 $ 371.3
========== ========== ========== ==========
(1) Backlog represents units under contract but not yet closed. Paseos
and Rivercrest, two joint ventures 50 percent owned by JOE, are
not included. Backlog at Paseos and Rivercrest totaled $142.8
million for 559 units at the end of the third quarter of 2005,
compared to $192.0 million for 654 units at the end of the third
quarter of 2004.
(2) For multifamily and PRC units which are recognized on a percentage
of completion method, revenues in this table reflect 100% of the
revenue to be generated from each unit and will differ from
revenues recorded in the financial statements. As of September 30,
2005, 202 units are in the homes backlog with related revenues of
$88.5 million (as of that date, $53.3 million had been recognized
in the financial statements); as of September 30, 2004, 228 units
are in the homes backlog with related revenues of $123.5 million
(as of that date, $52.7 million had been recognized in the
financial statements).
Northwest Florida
WaterColor
During the third quarter, contracts for 5 home sites in WaterColor
were accepted and closed at an average price of $806,400. The sale of
one home was closed in the third quarter at a price of $783,000. At
the end of the third quarter, 23 released home sites remained unsold.
WaterColor is a 1,140-unit premier beachfront resort community on
499 acres on the Gulf of Mexico in Walton County.
WaterSound Beach
Contracts for 39 multifamily units at Compass Point in WaterSound
Beach were closed in the third quarter at an average price of $1.5
million. An additional 9 multifamily units are under contract and
expected to close in the fourth quarter at an average price of $1.5
million. The remaining 43 units in Compass Point are scheduled to be
released for sale in 2006. Construction of 22 of those units is
expected to begin in the fourth quarter, while construction of the
last 21 units is expected to start in early 2006.
In the third quarter, contracts for 4 home sites were accepted and
closed at an average price of $1.4 million. At the end of the third
quarter, there were 6 single family homes and 8 home sites released
that remained unsold.
WaterSound Beach is set on over a mile of white sand beach on the
Gulf of Mexico in Walton County, five miles east of WaterColor.
WaterSound West Beach
During the third quarter, contracts were accepted for 8 home sites
released in WaterSound West Beach, of which 6 were closed at an
average price of $707,000. There are 18 home sites currently in
inventory.
WaterSound West Beach is a high-end resort community with 199
single family home sites on the beach side of County Road 30A adjacent
to Deer Lake State Park.
WaterSound
On September 28th, the U.S. Army Corps of Engineers issued a
dredge and fill permit for WaterSound, a resort community
approximately three miles from WaterSound Beach, less than two miles
from the Gulf of Mexico and north of U.S. 98 in Walton County.
Construction is proceeding on this 1,330-unit mixed-use
development on approximately 1,402 acres. WaterSound is being planned
for the pre-retirement and second-home markets with six and nine-hole
golf courses along with pools, beach access and other amenities. Sales
at WaterSound are expected to begin in mid-2006.
Camp Creek Golf Club at WaterSound
JOE has announced it plans to restrict play next year at Camp
Creek Golf Club at WaterSound to members and guests of specified JOE
communities.
"Early on, we had planned to ultimately restrict play at Camp
Creek to create a competitive advantage for designated JOE communities
and resort guests," said Twomey. "We intend to implement our plan to
make this world-class golf facility exclusive to JOE communities and
JOE resort guests in 2006."
Featuring a unique "dunescape" appearance, Camp Creek, designed by
Tom Fazio, was recently ranked eighth in Golfweek magazine's annual
"America's Best State-by-State" survey of the roughly 700
public-access courses in Florida.
Bay County Primary Communities
Development of community infrastructure is expected to begin in
the fourth quarter at Hawks Landing in Bay County, Florida. The
community consists of 167 home sites being developed for sale to local
and national homebuilders. Eighty-four of the home sites are reserved
for homebuilders based in Northwest Florida. JOE has agreed to sell
the remaining 83 home sites in the community to a national home
builder, D. R. Horton.
Hawks Landing is an 88-acre primary home community in the city of
Lynn Haven, a rapidly growing area of the region. Prices for home
sites in the 88- acre primary home community are initially expected to
range from $50,000 to more than $65,000.
On October 20th, JOE announced an agreement with David Weekley
Homes, LLP, the nation's second largest private home builder, to sell
55 developed home sites at an initial price of $75,000 at Palmetto
Trace in Panama City Beach for the construction of single family
homes.
Located in Panama City Beach off U.S. 98, Palmetto Trace is
entitled for 481 homes. JOE has contracted or sold 393 homes as of
September 30, 2005. Going forward, David Weekley Homes will market and
build homes with a variety of floor plans and options.
"D.R. Horton and David Weekley Homes are two of the nation's
finest home builders," said Twomey. "They will bring new housing
choices to residents of Bay County, helping to meet strong demand in
this community for primary homes across a broad range of price points.
We are seeing broadening interest in Northwest Florida from the
national homebuilders. In addition to Horton and Weekley,
conversations with others continue."
WindMark Beach
Construction continued in the third quarter on the next phase of
WindMark Beach, consisting of 1,552 units along more than 15,000 feet
of beachfront near the town of Port St. Joe. Construction also
continued on the realignment of a 3.5-mile segment of U.S. 98 within
WindMark Beach. Construction also continued during the third quarter
on a show home to be featured next year in Southern Accents magazine.
Plans for WindMark Beach provide that once U.S. 98 has been
relocated away from the beach, the existing roadbed will be rebuilt to
create a 3.5-mile public beachfront trail system.
WindMark Beach is planned as a top-of-market beachfront resort
destination with 1,662 units on 2,020 acres in Gulf County. Sales are
expected to begin in 2006.
SummerCamp
During September 2005, 48 of 52 non-binding reservations for home
sites in the first phase of SummerCamp were converted to contracts and
closed at prices ranging from $150,000 to $725,000, for an average
price of $380,000. Four of the home sites from the first release
remained in inventory at the end of the third quarter.
SummerCamp is a 499-unit development on 762 acres located
approximately 45 miles south of Tallahassee on the Gulf of Mexico.
SouthWood
Contracts were accepted at SouthWood for 30 single family homes in
the third quarter of this year at an average price of $326,500,
compared to 47 homes at an average price of $267,000 in the third
quarter last year.
SouthWood, located on 3,370 acres in Tallahassee, is designed for
primary homes.
Northeast Florida
RiverTown
Last week, the St. Johns County Commission approved a significant
zoning change for RiverTown, representing another key step in the
entitlements process. Environmental permitting and predevelopment
planning continue.
RiverTown is JOE's new Southern town with more than 3.5 miles of
frontage on the beautiful St. Johns River. It is being planned for
approximately 4,500 units on 4,170 acres. "The site is one of the last
stretches of riverfront in Northeast Florida suitable for large-scale
residential development with a central, convenient location," said
Rummell. "It is located within easy commuting distance to Jacksonville
and the evolving commercial center around I-95 and International Golf
Parkway."
"RiverTown is well-positioned in one of Florida's fastest growing
counties with one of the state's highest per-capita incomes," said
Rummell. "RiverTown is being designed as a town that will offer
residents a wide range of housing options, retail and commercial areas
and amenities designed to build a sense of community. Seven distinct
neighborhoods will blend to create a complete Southern town atmosphere
that embraces this scenic river with a 58-acre riverfront public
park."
After 6 years of hard work and planning, sales at RiverTown are
scheduled to start in 2006 with the first closings expected in 2007.
Central Florida
Victoria Park
At Victoria Park pricing increased during the third quarter. JOE
accepted contracts for 59 homes in the third quarter at an average
price of $319,200, compared to 62 homes at an average price of
$243,600 in the third quarter a year ago.
A Southern Living Idea House at Victoria Park was featured in the
magazine's August issue. More than 17,000 people have toured the home.
Located between Orlando and Daytona Beach, Victoria Park sits on
1,859 acres in the historic college town of DeLand. This mixed-used
community is planned for approximately 4,200 residences built among
parks, lakes and conservation areas.
Artisan Park, Celebration
JOE accepted contracts for 22 single-family homes at an average
price of $662,000 during the third quarter this year, compared to 10
single-family homes at average prices of $589,300 for the third
quarter of 2004.
The contracts on the first 32 condominiums were closed at Artisan
Park at an average price of $293,200 during the third quarter. JOE
also accepted contracts for 13 condominiums at an average price of
$524,100 during the third quarter, compared to 54 condominiums at an
average price of $340,600 in the same quarter last year.
Artisan Park is one of the last residential neighborhoods to be
developed at Disney's town of Celebration near Orlando. JOE owns 74
percent of the joint venture developing Artisan Park and manages the
project.
Southwest Florida
Perico Island
Predevelopment work continued on Perico Island in Manatee County
during the third quarter. Entitled for 686 condominium residences on
352 acres, Perico Island is being designed to become a condominium
community with panoramic vistas of Tampa Bay, Anna Maria Sound, Perico
Bayou and the Gulf of Mexico. The community is planned to feature a
private clubhouse designed to include a fitness center, bar and grill,
screening room, swimming pool and tennis courts. Construction and
sales are expected to begin next year.
JOE has purchased two parcels of land adjacent to the Perico
Island site. The seven acres include the closed Leverock's restaurant,
as well as the former Perico Harbor Marina, a service station, and a
convenience store. The additional land will allow a significant
upgrade of the existing street frontage, create an aesthetically
pleasing community entrance and provide future residents with marina
access and other amenities.
North and South Carolina
Saussy Burbank, JOE's homebuilder based in Charlotte, N.C.,
accepted contracts for 221 homes during the third quarter this year,
compared to 159 contracts in the third quarter of 2004. "We have seen
a broad strengthening across our Carolina markets," said Twomey.
"Saussy has accomplished a remarkable turnaround, repositioning itself
in the Carolina markets as one of the strongest regional
homebuilders."
Table 7 summarizes the sales activity at various residential
communities for the third quarters of 2005 and 2004.
Table 7
St. Joe Towns & Resorts
Sales Activity
For the Three Months Ended September 30,
($ in thousands)
2005
-------------------------------------------
Contracts
Units Accepted
Closed Avg. Price (1) Avg. Price
---------- ---------- ---------- ----------
WaterColor
Home Sites 5 $ 851.4 6 $ 806.4
Single/Multifamily Homes 1 783.0 0 N/A
PRC Shares 0 N/A 0 N/A
WaterSound Beach
Home Sites 4 1,361.7 4 1,361.7
Single Family Homes 0 N/A 0 N/A
Multifamily Homes 39 1,490.5 0 N/A
WaterSound West Beach
Home Sites 6 707.0 8 721.3
Single Family Homes 0 N/A 0 N/A
Palmetto Trace
Single Family Homes 33 251.0 18 336.5
The Hammocks
Home Sites 0 N/A 0 N/A
Single Family Homes 19 145.2 13 155.5
WindMark Beach
Home Sites 0 N/A 0 N/A
Bridgeport
Home Sites 21 29.9 21 29.9
SouthWood
Home Sites 12 141.5 8 142.8
Single Family Homes 64 248.5 30 326.5
SummerCamp
Home Sites 48 380.0 48 380.0
Single Family Homes 0 N/A 0 N/A
St. Johns G & CC
Home Sites 12 74.0 0 N/A
Single Family Homes 30 436.5 10 504.6
Hampton Park/ James
Island
Single Family Homes 2 374.6 1 399.9
Victoria Park
Home Sites 4 76.4 9 123.4
Single Family Homes 68 279.8 59 319.2
Artisan Park(2)
Home Sites 1 460.0 1 460.0
Single Family Homes 20 465.3 22 662.0
Multifamily Homes 32 293.2 13 524.1
Paseos(2)
Single Family Homes 28 454.6 0 N/A
Rivercrest(2)
Single Family Homes 136 166.9 0 N/A
Saussy Burbank
Single Family Homes 195 269.8 221 259.7
2004
-------------------------------------------
Contracts
Units Accepted
Closed Avg. Price (1) Avg. Price
---------- ---------- ---------- ----------
WaterColor
Home Sites 28 $ 687.6 21 $ 718.6
Single/Multifamily Homes 1 917.6 4 995.6
PRC Shares 0 N/A 34 220.1
WaterSound Beach
Home Sites 0 N/A 0 N/A
Single Family Homes 0 N/A 1 5,100.0
Multifamily Homes 0 N/A 25 1,405.5
WaterSound West Beach
Home Sites 0 N/A 0 N/A
Single Family Homes 0 N/A 0 N/A
Palmetto Trace
Single Family Homes 24 136.5 14 149.9
The Hammocks
Home Sites 28 38.6 28 38.6
Single Family Homes 17 142.6 8 195.7
WindMark Beach
Home Sites 1 975.0 1 975.0
Bridgeport
Home Sites 0 N/A 0 N/A
SouthWood
Home Sites 19 102.1 23 100.8
Single Family Homes 35 223.0 47 267.0
SummerCamp
Home Sites 0 N/A 0 N/A
Single Family Homes 0 N/A 0 N/A
St. Johns G & CC
Home Sites 4 118.0 0 N/A
Single Family Homes 26 346.8 31 397.3
Hampton Park/ James
Island
Single Family Homes 14 387.3 9 397.8
Victoria Park
Home Sites 11 85.4 10 65.7
Single Family Homes 42 227.6 62 243.6
Artisan Park(2)
Home Sites 4 225.0 4 225.0
Single Family Homes 9 427.8 10 589.3
Multifamily Homes 0 N/A 54 340.6
Paseos(2)
Single Family Homes 19 405.9 35 507.0
Rivercrest(2)
Single Family Homes 57 150.6 205 175.0
Saussy Burbank
Single Family Homes 208 231.9 159 232.2
(1) Contracts accepted during the quarter. Contracts accepted and
closed in the same quarter are also included as units closed.
Average prices shown reflect variations in the product mix across
time periods as well as price changes for similar product.
(2) JOE owns 74 percent of Artisan Park and 50 percent of each of
Paseos and Rivercrest. Sales from Paseos and Rivercrest are not
consolidated with the financial results of St. Joe Towns &
Resorts.
COMMERCIAL REAL ESTATE
The commercial segment consisted of St. Joe Commercial, Inc.,
JOE's commercial real estate development unit, and Advantis Real
Estate Services Company (Advantis), a commercial real estate services
unit. On September 7th, JOE sold Advantis to its management team.
Pretax income from continuing operations from the commercial
segment was $14.2 million for the third quarter of 2005, compared with
$2.8 million in the same quarter of 2004, excluding income from
unconsolidated affiliates.
Pretax income from discontinued operations for the third quarter
of 2005 was $14.8 million. Included were pretax gains of $25.6 million
from the sale of three office buildings and the pretax loss of $9.9
million on the sale of Advantis. See Table of Quarterly Discontinued
Operations below. Pretax income from discontinued operations in the
third quarter of 2004 was $7.5 million, primarily resulting from the
sale of two office buildings.
St. Joe Commercial
"Our commercial division turned in its best quarter ever driven by
gains on building sales in Washington, DC and Florida, along with
multifamily and retail land sales in Bay and Leon Counties," said
Twomey. "During the third quarter of 2005, JOE sold 11 Northwest
Florida commercial land parcels for $19.2 million."
Commercial land sales averaged $145,000 per acre in 2005's third
quarter, compared to $39,000 per acre in the third quarter a year ago.
Table 8 summarizes JOE's commercial land sales in Northwest
Florida for the third quarters of 2005 and 2004.
Table 8
St. Joe Commercial Northwest Florida Land Sales
Quarter Ended September 30
Gross Average
Sales Price Price/Acre
Number of Sales Acres Sold (in thousands) (in thousands)
--------------- --------------- --------------- ---------------
2005 11 132 $ 19,194 $ 145
2004 10 100 3,858 39
Northwest Florida
Retail
Simon Property Group closed on an additional 24 acres at Pier Park
in Panama City Beach for $5.6 million or $236,000 per acre during the
third quarter. Simon has also started construction on their planned
lifestyle center at Pier Park which will total approximately 1.0
million square feet of retail space.
"Simon has under contract or option the right to purchase an
additional 100 acres near Pier Park," said Twomey. "JOE retains
approximately 13 acres in Pier Park near the beach for future JOE
hotel and/or timeshare development. In addition, JOE owns 60 acres
adjacent to Pier Park with zoning for high-density residential uses."
"Interest from large national retailers in Northwest Florida, and
Panama City Beach in particular, continued to be strong in the third
quarter," said Twomey. "We look forward to bringing new retail
operators into the market later this year and in 2006 at higher
per-square-foot prices."
Multifamily
During the third quarter, JOE closed on 4 parcels intended for
multifamily development totaling 68 acres at an average price of
$176,000 per acre. These land parcels, with residential entitlements
totaling 742 units, were sold to national and regional multifamily
developers including Trammell Crow Residential, Broadstreet Partners
and EPOCH Properties.
"Multifamily housing, which includes apartments, condominiums and
town homes, is critically important to the Northwest Florida economy
as new workers arrive in the marketplace," said Twomey. "These
transactions represent important new housing choices for residents in
Bay and Leon Counties."
"The increasing Northwest Florida demand from national and
regional multifamily developers reflects the greater awareness of the
region as a viable residential market for a broad range of product
types," said Twomey. "This demand has driven prices for multifamily
parcels from $3,000 to $4,000 per residential unit three years ago to
the approximately $16,000 per-unit average pricing achieved during the
third quarter."
Commerce and Business Parks
During the third quarter this year, commercial land sales within
JOE's commerce and business parks totaled $0.8 million, compared to
$1.3 million in the third quarter last year. JOE has 8 parks operating
or under development in 5 Northwest Florida counties.
"Strong demand and pricing continued in the third quarter at JOE's
commerce parks," said Twomey. "New jobs are being created in the
region and these commerce parks are providing local and regional
businesses with parcels that can be placed into service quickly."
Nearly one third of the parcels have been sold in South Walton
Commerce Park, which opened late in 2004. A contract was closed on one
parcel in the third quarter for $374,000 per acre, compared to an
initial sale in the park at $161,000. JOE is already planning the
second phase of this park.
At Beach Commerce Park, demand was strong in the third quarter for
office and light industrial land with average pricing climbing to
$85,000 per acre for sales closed during the quarter, compared with
$69,000 per acre in the same quarter a year ago. Two parcels were sold
in the third quarter for gross proceeds of $501,000. During the third
quarter, JOE doubled the asking price of Beach Commerce Park parcels
with no frontage on Highway U.S. 98 from $100,000 per acre to $200,000
per acre.
Table 9 summarizes the status of JOE's commerce and business parks
in Northwest Florida as of September 30th.
Table 9
Commerce and Business Parks (1)
September 30, 2005
Acres
Net Sold/
Saleable Under Current Asking
Commerce Parks County Acres Contract Price Per Acre
- ------------------------ ------- --------- --------- -----------------
Airport Commerce Leon 40 -- $75,000-$260,000
Beach Commerce Bay 161 136 200,000-500,000
Beach Commerce II Bay 115 -- 150,000-225,000
Hammock Creek Commerce Gadsden 114 27 50,000-150,000
Port St. Joe Commerce Gulf 58 58 Sold Out
Port St. Joe Commerce II Gulf 40 5 65,000-135,000
South Walton Commerce Walton 39 14 335,000-600,000
--------- ---------
Subtotal 567 240
--------- ---------
Business Parks
- ------------------------
Beckrich Office Bay 12 8 TBD(2)
Nautilus Court Bay 11 4 523,000-610,000
SouthWood Business Leon 16 14 215,000-220,000
SouthWood Business II Leon 22 3 160,000-750,000
--------- ---------
Subtotal 61 29
--------- ---------
Total 628 269
========= =========
(1) Includes existing parks, as well as parks under development.
(2) To be determined.
Investment Property Portfolio
In the third quarter, JOE closed the sale of an 119,000
square-foot office building at 1133 20th Street, NW, in Washington,
DC, that was held in its investment property portfolio. JOE sold the
property for $46.9 million, for an approximate pretax gain of $19.7
million. Two smaller Florida office buildings were also sold during
the quarter for total proceeds of approximately $25.0 million and an
approximate pretax gain of $5.9 million. The pretax gain for the three
office buildings is approximately $25.6 million.
As of September 30, 2005, JOE's portfolio of commercial office
buildings (acquired through its redeployment program of tax deferred
sales proceeds from the sale of land and buildings from the investment
portfolio) totaled approximately 2.5 million square feet and
represented an aggregate initial investment of $338 million.
Table 10 summarizes JOE's investment property portfolio of
commercial buildings as of September 30th.
Table 10
Investment Portfolio of Commercial Buildings
September 30, 2005
Number of Net Rentable Leased
Location Properties Square Feet Percentage
- ---------------------- --------------- --------------- ---------------
Florida
Jacksonville 1 136,000 69 %
Northwest Florida 3 156,000 96
Orlando 2 317,000 71
Tampa 3 300,000 79
Atlanta 8 1,289,000 79
Charlotte 1 158,000 100
Richmond 2 129,000 96
--------------- --------------- ---------------
Total 20 2,485,000 81 %
=============== =============== ===============
Advantis
On September 7th, JOE sold its subsidiary, Advantis, to the
Advantis management team for a purchase price of $11.0 million in cash
and notes, resulting in an after-tax loss of approximately $6.2
million, or $0.08 per share.
Approximately 500 Advantis employees were transferred to the
operations of the new company. JOE's commercial real estate
development activity is unaffected by the transaction. JOE will
continue its relationship with the new entity, GVA Advantis, as the
leasing agent and property manager for the majority of JOE's
commercial real estate portfolio. GVA Advantis also will continue to
represent JOE in the marketing and disposition of certain land
holdings in Northwest Florida.
ST. JOE LAND COMPANY
St. Joe Land Company had pretax income from continuing operations
of $16.6 million in the third quarter of 2005, compared with $11.5
million in the third quarter of 2004.
"With the continued development of our New Ruralism products -
RiverCamps, WhiteFence Farms and Florida Ranches - we believe we can
move additional timberland acres to a higher and better use," said
Twomey. "The New Ruralism concept continues to evolve, revealing new
markets and product lines. We are continuing to work on the
development of new niche rural land products."
RiverCamps
RiverCamps are planned settlements in rustic settings, offering
personal retreats in private preserves. RiverCamps' low-density home
sites, typically averaging one acre, are surrounded by a large common
area preserved for conservation.
RiverCamps on Crooked Creek
Contracts for 25 of 32 home sites at RiverCamps on Crooked Creek
offered in July were accepted and closed at an average price of
$339,400, compared to $226,200 for similar product in the third
quarter last year.
On October 3, 2005, JOE released 40 home sites in RiverCamps on
Crooked Creek with an average price of $386,900 and a price range of
$210,000 to $1.2 million. This release includes 7 home sites
previously released in the second quarter and held in inventory.
Pricing for these previously-released home sites was increased
slightly.
Construction has started on the RiverHouse amenity complex, the
boat launch and dock facility, and construction is completed on over
7,500 feet of nature trails and almost 1,000 feet of elevated walkways
and bridges traversing marsh grass and deepwater creeks. Construction
of infrastructure for 190 home sites is expected to be completed by
year end while construction of another 43 home sites is slated for
completion in April, 2006. A RiverCamps prototype cabin is expected to
be completed and furnished by year end.
RiverCamps on Crooked Creek, located in western Bay County, is
currently planned for up to 408 home sites on 1,491 acres of former
timberland and features views of West Bay, the Intracoastal Waterway
and Crooked Creek.
WhiteFence Farms
JOE's WhiteFence Farms will be communities of small farms. Each
property is planned to have room for a large home site plus other
optional buildings, such as barns, guesthouses and stables.
JOE plans to develop WhiteFence Farms communities in multiple
Northwest Florida locations over the next several years, totaling
several thousand acres. Individual farmsteads will typically range in
size from 3 to 15 acres. WhiteFence Farms are being designed to feel
"old farm and equestrian," but near suburban services.
WhiteFence Farms - Red Hills
Pre-development planning started in the third quarter of this year
at WhiteFence Farms - Red Hills on 373 acres near Tallahassee. Initial
pricing is expected to range from $20,000 to $45,000 per acre for a
typical farm site. Sales are expected to begin in 2006.
During the third quarter, Southern Living and The Progressive
Farmer magazines selected WhiteFence Farms - Red Hills for a 2006 Idea
House and Farmstead.
Florida Ranches
Pre-development planning continued in the third quarter of 2005 on
the initial Florida Ranch properties in several locations in Northwest
Florida. Florida Ranches are expected to consist of 50- to 150-acre
sites located within 1,000 to 3,000-acre communities.
Initial pricing for Florida Ranch parcels is expected to range
from $4,500 to $7,500 per acre. Sales are expected to begin in 2006.
Rural Land Sales
JOE sold 6,437 acres of rural land at an average price of $2,545
per acre during the third quarter this year, compared to 2,822 acres
for an average price of $5,032 per acre in the same quarter a year
ago. This variance in price-per-acre is due to the sale of one large
parcel in the third quarter of 2004 consisting of approximately 323
acres at a purchase price of $8.7 million, or $27,000 per acre. The
mix of land sold each quarter varies by location and quality.
"We continue to shift our focus away from buyers who intend to
subdivide parcels for resale to those who intend to use the land for a
specific personal use," said Twomey. "We expect this strategy shift to
improve per acre pricing. Interest is high in Florida rural
recreational land."
In the third quarter, JOE sold 600 acres in southwest Georgia that
had been recently harvested and has little topographic interest. The
land, owned by the company for decades, sold for $1.3 million, or
$2,125 per acre. "We believe this price highlights the value of
woodlands in this region," said Twomey.
"We are particularly pleased with the price we received for this
land sale when you consider that earlier this year JOE paid $1,225 per
acre for approximately 47,000 acres in southwest Georgia but with a
good stand of timber, much more interesting topography and significant
river frontage."
FINANCIAL DATA
($ in millions except per share amounts)
Summary Balance Sheet
September 30, September 30,
2005 2004
--------------- ---------------
Assets
Investment in real estate $ 977.7 $ 907.0
Cash and cash equivalents 220.7 95.6
Accounts receivable 79.6 81.1
Prepaid pension asset 94.4 95.2
Property, plant and equipment, net 39.8 34.8
Other assets 149.3 132.8
Assets held for sale 16.6 --
--------------- ---------------
Total assets $ 1,578.1 $ 1,346.5
=============== ===============
Liabilities and Stockholders' Equity
Debt $ 524.3 $ 400.3
Accounts payable, accrued liabilities 218.4 194.5
Deferred income taxes 305.0 254.4
Liabilities related to assets held for
sale 0.4 --
--------------- ---------------
Total liabilities 1,048.1 849.2
Minority interest 16.6 6.8
Total stockholders' equity 513.4 490.5
--------------- ---------------
Total liabilities and stockholders'
equity $ 1,578.1 $ 1,346.5
=============== ===============
Debt Schedule
September 30, September 30,
2005 2004
--------------- ---------------
Senior notes $ 407.0 $ 275.0
Revolving debt facility -- --
Acquisition and other debt 14.9 15.3
Other collateralized/specific asset
related debt 102.4 110.0
--------------- ---------------
Total debt $ 524.3 $ 400.3
=============== ===============
Consolidated Quarterly Comparisons
Quarter Ended Nine months Ended
September 30, September 30,
-------------------------------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Revenues:
Real estate sales $ 206.5 $ 189.9 $ 593.3 $ 503.2
Timber sales 6.2 8.1 21.8 27.2
Rental revenue 10.1 8.0 30.5 22.4
Other revenues 12.7 13.7 34.9 33.3
---------- ---------- ---------- ----------
Total revenues 235.5 219.7 680.5 586.1
---------- ---------- ---------- ----------
Expenses:
Cost of real estate
sales 132.7 128.9 380.2 333.7
Cost of timber sales 4.9 5.1 15.1 16.9
Cost of rental revenue 3.6 3.2 11.6 9.3
Cost of other revenues 10.0 11.4 29.8 27.9
Other operating expenses 19.0 16.4 52.2 49.0
Corporate expense, net 12.4 10.6 36.3 29.2
Depreciation and
amortization 9.5 7.7 28.3 22.8
Impairment loss -- -- -- 2.0
---------- ---------- ---------- ----------
Total expenses 192.1 183.3 553.5 490.8
---------- ---------- ---------- ----------
Operating profit 43.4 36.4 127.0 95.3
Other income (expense) (2.5) (2.0) (6.0) (5.0)
---------- ---------- ---------- ----------
Pretax income from
continuing operations 40.9 34.4 121.0 90.3
Income tax expense (15.9) (13.8) (48.0) (36.0)
Minority interest
(expense) income (1.3) (0.4) (3.4) (0.9)
Equity in income (loss) of
unconsolidated affiliates 3.1 1.4 10.6 3.0
Discontinued operations 9.3 4.7 9.2 5.6
---------- ---------- ---------- ----------
Net income $ 36.1 $ 26.3 $ 89.4 $ 62.0
========== ========== ========== ==========
Net income per diluted
share $ 0.47 $ 0.34 $ 1.17 $ 0.81
========== ========== ========== ==========
Weighted average diluted
shares outstanding 76,089,307 76,570,836 76,432,285 76,999,375
Quarterly Revenues By Segment
Quarter Ended Nine months Ended
September 30, September 30,
---------- ---------- ---------- ----------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Towns & Resorts
Real estate sales $ 156.1 $ 153.9 $ 476.0 $ 411.2
Rental revenue 0.6 0.3 1.2 0.8
Other revenues 12.3 13.3 34.2 32.2
---------- ---------- ---------- ----------
Total Towns & Resorts $ 169.0 $ 167.5 511.4 444.2
---------- ---------- ---------- ----------
Commercial real estate
Real estate sales 26.1 21.4 51.8 40.7
Rental revenue 9.6 7.7 29.2 21.6
Other revenues 0.3 0.4 0.5 1.2
---------- ---------- ---------- ----------
Total Commercial real
estate 36.0 29.5 81.5 63.5
---------- ---------- ---------- ----------
Land Sales
Real estate sales 24.2 14.6 65.6 51.3
Other revenues 0.1 -- 0.2 --
---------- ---------- ---------- ----------
Total Land sales 24.3 14.6 65.8 51.3
---------- ---------- ---------- ----------
Forestry sales 6.2 8.1 21.8 27.1
---------- ---------- ---------- ----------
Total revenues $ 235.5 $ 219.7 $ 680.5 $ 586.1
========== ========== ========== ==========
Quarterly Segment Pretax Income
From Continuing Operations
Sept June Mar Dec
30, 30, 31, 31,
2005 2005 2005 2004
-------- -------- -------- --------
Towns & Resorts $ 25.6 $ 50.9 $ 23.1 $ 24.7
Commercial real estate 14.2 2.5 1.2 17.0
Land sales 16.6 16.0 12.0 16.3
Forestry 0.6 1.6 2.0 2.1
Corporate and other (16.1) (15.4) (13.8) (17.0)
-------- -------- -------- --------
Pretax income from
continuing operations $ 40.9 $ 55.6 $ 24.5 $ 43.1
======== ======== ======== ========
Sept June Mar Dec Sept
30, 30, 31, 31, 30,
2004 2004 2004 2003 2003
-------- -------- -------- -------- --------
Towns & Resorts $ 31.8 $ 34.4 $ 9.1 $ 13.2 $ 32.1
Commercial real estate 2.8 1.0 0.7 0.5 3.6
Land sales 11.5 10.3 18.6 32.7 14.8
Forestry 1.9 2.4 2.7 2.3 1.6
Corporate and other (13.6) (11.9) (11.5) (11.6) (11.9)
-------- -------- -------- -------- --------
Pretax income from
continuing operations $ 34.4 $ 36.2 $ 19.6 $ 37.1 $ 40.2
======== ======== ======== ======== ========
Other Income (Expense)
Quarter Ended
September 30,
---------------------
2005 2004
---------- ----------
Dividend and interest income $ 0.8 $ 0.3
Interest expense (4.3) (2.8)
Other 1.0 0.5
---------- ----------
Total $ (2.5) $ (2.0)
========== ==========
Equity in Income of Unconsolidated Affiliates
Quarter Ended
September 30,
---------------------
2005 2004
---------- ----------
Towns & Resorts $ 3.1 (1) $ 1.0
Commercial real estate -- 0.4
---------- ----------
$ 3.1 $ 1.4
========== ==========
(1) Resulted primarily from equity in two residential joint ventures
in Tampa and Jupiter, Florida.
Quarterly Discontinued Operations
Quarter Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Income (loss) from
Advantis operations, net
of tax $ (0.6) $ -- $ (0.6) $ 0.2
Income from office
buildings, net of tax 0.1 0.1 -- 0.8
Other discontinued
operations, net of tax -- (0.2) -- (0.2)
Loss on sale of Advantis,
net of tax (6.2) -- (6.2) --
Gains on sales of office
buildings, net of tax 16.0 4.8 16.0 4.8
---------- ---------- ---------- ----------
Net income from
discontinued operations $ 9.3 $ 4.7 $ 9.2 $ 5.6
========== ========== ========== ==========
Reported results are preliminary and not final until the filing of
our Form 10-Q with the SEC and, therefore, remain subject to
adjustment.
Conference Call Information
JOE will host an interactive conference call to review the
Company's results for the quarter ended September 30, 2005, and to
discuss earnings guidance for 2005 on Tuesday, October 25, 2005, at
10:30 a.m., Eastern Daylight Time.
To participate in the call, please phone 866.719.0110 (for
domestic calls from the United States) or 719.785.9444 (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 888.203.1112 (domestic) or
719.457.0820 (international) using access code 1775104. 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 town, resort, commercial and industrial
development and land sales. 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, pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
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", "should", "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 and home site
sales;
-- the pace at which we release new products for sale;
-- future operating performance, cash flows, and short and
long-term revenue and earnings growth rates;
-- comparisons to historical projects;
-- the amount of dividends we pay; 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 our current expectations, and we undertake no
obligation to update the information contained in this release. New
information, future events or risks may cause the forward-looking
events we discuss in this earnings release not to occur.
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, 2004 as well as, among
others, the following:
-- economic conditions, particularly in Northwest Florida,
Florida as a whole and key areas of the southeast United
States that serve as feeder markets to our Northwest Florida
operations;
-- changes in the demographics affecting projected population
growth in Florida, including the demographic migration of Baby
Boomers;
-- whether our developments receive all land-use entitlements or
other permits necessary for development and/or full build-out
or are subject to legal challenge;
-- local conditions such as the supply of homes and home sites
and residential or resort properties or a change in the demand
for real estate in an area;
-- timing and costs associated with property developments and
rentals;
-- the pace of commercial development in Northwest Florida;
-- competition from other real estate developers;
-- changes in operating costs, including real estate taxes and
the cost of construction materials;
-- 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;
-- changes in interest rates and the performance of the financial
markets;
-- changes in market rental rates for our commercial and resort
properties;
-- changes in the prices or availability of wood products;
-- the pace of development of public infrastructure, particularly
in Northwest Florida, including a proposed new airport in Bay
County, which is dependent on approvals of the local airport
authority and the Federal Aviation Administration, various
permits and the availability of adequate funding;
-- potential liability under environmental laws or other laws or
regulations;
-- changes in laws, regulations or the regulatory environment
affecting the development of real estate;
-- fluctuations in the size and number of transactions from
period to period;
-- natural disasters, including hurricanes and other severe
weather conditions, and the impact on current and future
demand for our products in Florida;
-- the continuing effects of recent hurricane disasters on the
regional and national economies and current and future demand
for our products in Florida;
-- the prices and availability of labor and building materials;
-- changes in insurance rates and deductibles for property in
Florida;
-- changes in gasoline prices; and
-- acts of war, terrorism or other geopolitical events.
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 2005, The St. Joe Company. "St. Joe," "JOE," "Artisan
Park," "Camp Creek," "Paseos," "Pier Park," "RiverCamps," "RiverTown,"
"SouthWood," "SummerCamp," "Victoria Park," "WaterColor,"
"WaterSound," "WhiteFence Farms," "WindMark," and the "taking flight"
design are service marks of The St. Joe Company.
"Southern Living" is a registered trademark of Southern Living,
Inc.
"Southern Accents" is a registered trademark of Southern Accents,
Inc.
"Progressive Farmer" is a registered trademark of Progressive
Farmer, Inc.
CONTACT: The St. Joe Company
Media Contact:
Jerry M. Ray, 904-301-4430
jray@joe.com
or
Investor Contact:
Brad Slappey, 904-301-4302
bslappey@joe.com
www.joe.com