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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) February 3, 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 9. REGULATION FD DISCLOSURE
-----------------------
The following information is being furnished pursuant to Item 12,
"Results of Operations and Financial Condition," in accordance with
SEC Release No. 33-8216.
The Company issued a Press Release dated February 3, 2004,
announcing the Company's financial results for the year ended
December 31, 2003. 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: February 3, 2004 By: /s/ Michael N. Regan
----------------------------------
Name: Michael N. Regan
Title: Senior Vice President
Exhibit 99.1
The St. Joe Company - NYSE:JOE - Reports Full Year 2003 Net Income of
$76.2 Million, or $0.98 Per Share
JACKSONVILLE, Fla.--(BUSINESS WIRE)--Feb. 3, 2004--The St. Joe
Company (NYSE:JOE):
-- Fourth Quarter Net Income was $28.9 Million, or $0.37 Per
Share
-- Earnings Growth Expected in 2004
-- St. Joe Acquires 3.4 Million Shares in 2003
-- Bay County Commission Approves Land-Use Plans for West Bay and
Airport
The St. Joe Company (NYSE:JOE) today announced that its 2003 net
income was $76.2 million, or $0.98 per share, compared with $174.4
million, or $2.14 per share, for 2002. Fourth quarter 2003 net income
was $28.9 million, or $0.37 per share, compared with $55.3 million, or
$0.70 per share, in the same quarter of 2002. All per-share references
in this release are presented on a fully diluted basis.
The results for 2002 included two large gains and the results for
2003 included a non-cash asset impairment charge. Both years included
gains from conservation land sales. These items, which are detailed in
Table 1 below, were excluded from our earlier 2003 guidance. Excluding
these same items, 2003 results represented a 33 percent improvement
over the 2002 baseline.
"JOE turned in a great year in 2003 - again," said Peter S.
Rummell, chairman and CEO of St. Joe. "And 2003 was capped by an
excellent fourth quarter, with strong financial performance, along
with important strategic achievements in entitlements and
infrastructure."
"The results for 2003 came in at the high end of the range of our
earlier guidance, principally due to increased sales at our resort and
residential communities and increased land sales by St. Joe Commercial
and St. Joe Land," said Kevin M. Twomey, president, COO and CFO of St.
Joe.
Table 1
Selected Components of Net Income
For Years 2003 and 2002
(in millions) Per Share
------------- -------------
2003 2002 2003 2002
Conservation land sales $22.7 $18.5 $0.29 $0.23
Net gain on sale of Arvida
Realty Services (ARS) -- 20.7 -- 0.25
Forward sale of securities -- 86.4 -- 1.06
Non-cash Advantis charge ( 8.8) -- (0.11) --
A Strong Fourth Quarter for JOE
"JOE closed 2003 with a strong fourth quarter," said Rummell.
"Sales were strong across the company for residential, resort,
commercial and rural real estate. Conservation land sales were also
strong in the fourth quarter."
Some highlights from the fourth quarter include:
-- JOE's Community Development division had an excellent fourth
quarter with strong pricing and sales velocity.
-- Units at WaterColor and WaterSound Beach are selling quickly.
With demand high, we are managing inventories to build
long-term value.
-- JOE's Commercial division set a new record for the quarter.
The Commercial pipeline of business continues to build on
strong market interest in Northwest Florida's retail, office,
multi-family and other mixed-use products.
-- JOE's Land Company turned in its best quarter of the year,
capping its best year ever.
-- The first release of 23 home sites at RiverCamps on Crooked
Creek sold out after a lottery process was used to select
buyers. All 23 closed in the fourth quarter.
-- Through JOE's capital redeployment program, three office
buildings with 465,000 square feet were acquired in Atlanta.
This portfolio now totals more than 2.3 million square feet
and represents an aggregate investment of more than $312
million.
In the fourth quarter, JOE continued to work on additional
entitlements for a wide variety of residential, resort and RiverCamp
products in Northwest Florida and other high-growth regions of the
state. JOE has more than 25,000 Florida residential-unit entitlements
in hand or at various stages in the approval process, representing a
significant pipeline of future value. Significant entitlement
benchmarks during the fourth quarter included:
-- Bay County approved the West Bay Detail Specific Area Plan
(DSAP) that provides land use changes for 16,556 acres of JOE
land. The plan, a portion of which is contingent on the
approval of the airport relocation, provides for development
in three phases with 5,842 residential units and 4.4 million
square feet of commercial, industrial and retail space.
-- The Walton County Commission approved land use entitlements
for 478 residential units and 35,000 square feet of commercial
space at WaterSound north of U.S. Highway 98.
"JOE's efforts to improve Northwest Florida's roads, air service,
health care and education are showing tangible results and continue to
represent real promise," said Rummell. "During the fourth quarter the
process for the proposed relocation of the airport in Bay County
reached an important milestone."
-- The Bay County Commission voted to approve a land-use measure
that creates the opportunity to relocate the Panama City - Bay
County International airport within the West Bay Sector,
subject to further government approvals.
"As work continues on this range of development and infrastructure
projects, we are working closely with local communities to protect the
Panhandle's unique character and quality of life," said Rummell. "We
believe we are building a solid foundation from which we will be able
to create shareholder value for a long time to come. At the same time,
we are making progress on projects that will help make Northwest
Florida an even better place to call home."
A Record of Progress
"As we begin 2004, we're very proud of our record of progress over
the past seven years - but more important, we're tremendously excited
about the future of opportunity ahead of us," said Rummell. "Even with
all we've accomplished, we firmly believe the best is yet to come."
"Since we began our transformation to a real estate operating
company in 1997, JOE has achieved a remarkable track record," said
Twomey. "JOE's value creation strategy has delivered a total
shareholder return (dividends and stock appreciation) of 188 percent
since January 1, 1997, compared to the S&P 500's 49 percent gain over
that same period."
"The equity market capitalization of JOE was $1.98 billion on
December 31, 1996," said Twomey. "Through December 31, 2003, JOE has
distributed $1.83 billion to shareholders through regular and special
cash dividends, share repurchases, and the spin-off of its equity
interest in Florida East Coast Industries. With all that accomplished,
at December 31, 2003, the equity market capitalization of JOE had
still grown to $2.84 billion."
"JOE's performance this past year also signaled a maturation of
our place-making process in Northwest Florida," said Rummell. "The
success of our community development efforts is stimulating demand for
commercial and retail space on nearby JOE land. Other developers often
see this aspect of the value creation process escape to other land
owners. We believe that JOE's ability to capture and convert a
significant portion of this related value is a unique advantage that
has only started to produce results for our shareholders."
"Many of our initial projects have matured into wonderful and
exciting places with significant potential remaining," said Rummell.
"These new places have earned national recognition and attracted
buyers from across the country. And more is on the way."
"At the same time, we have made significant progress in protecting
Northwest Florida's quality of life by helping preserve more than
160,000 acres of environmentally special lands for future
generations," said Rummell. "We are proud of this legacy."
A Future of Opportunity
"JOE is a one-of-a-kind company," said Rummell. "JOE's excellent
record highlights the benefits of our unique competitive advantages -
low-basis, high-quality land, favorable demographics, a strong balance
sheet and an experienced management team. Now, with a variety of new
projects positioned to come to market, we have a greater opportunity
to capitalize on these advantages in 2004 and beyond."
OUTLOOK FOR 2004
"With a strong foundation in place, we see another good year for
JOE with solid earnings growth in 2004," said Twomey.
"In discussing our expectations, we will make comparisons to 2003
excluding from that year's results conservation land sales ($22.7
million contribution to net income) and the non-cash Advantis charge
($8.8 million deduction from net income)," said Twomey. Excluding
these items, 2003 "baseline" earnings per share was $0.80 as detailed
in Table 2 below.
Table 2
Guidance Baseline
2003 2003
(in millions) Per Share
-------------- -----------
Reported net income $76.2 $0.98
Less conservation gains (22.7) (0.29)
Plus Advantis charge 8.8 0.11
-------------- -----------
2003 Baseline $62.3 $0.80
============== ===========
Full-Year Expectations for 2004
"For the full year 2004, the company expects per share income,
before conservation land sales, to increase by 10 to 15 percent from
the 2003 baseline of $0.80 per share," said Twomey. "Our projections
for 2004 are based on the assumption that the current market
conditions continue."
"In 2004, we expect several communities, including RiverTown,
WindMark Beach and WaterSound, to receive land use approvals,
requiring a significant investment in infrastructure to bring them to
market," said Twomey. "In that light, we expect to advance our core
strategies in 2004, achieve significant progress in building future
value for our holdings in Northwest Florida and deliver excellent
results for shareholders."
"We anticipate having sufficient resources available to fund our
development efforts and $125 million to $175 million for the
repurchase of shares, the acquisition of surrendered shares and
dividend payments," said Twomey. "Timing of repurchase activity
throughout the year is subject to the magnitude and timing of earnings
and cash flows."
Community Development
"Pretax income from continuing operations for our community
development segment is expected to continue to grow in 2004," said
Twomey. "These results reflect continued progress, particularly at
WaterColor and WaterSound Beach. Contributions from a number of
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, will also be important."
"We expect to make significant progress this year in the planning
and entitlement of RiverTown and the next phases of WindMark Beach and
WaterSound, although we do not intend to bring any of them to market
in time to affect 2004 earnings," said Twomey. "This will position the
company for the future. We are particularly pleased with the advances
that have been made at SummerCamp, a proposed community now in its
final permitting stages in Franklin County. Later this year, we plan
to release the first home sites at SummerCamp. Based on the enthusiasm
we see now, we expect to use a lottery process to select buyers."
Commercial Real Estate
"During 2004, St. Joe Commercial will continue to focus on the
development and sale of retail and commercial properties in Northwest
Florida," said Twomey. "Commercial land sales in Northwest Florida
delivered a meaningful contribution to 2003's fourth quarter results
and we expect that trend to continue. Although the timing of
transactions in this business is hard to predict, we enter 2004 with a
strong pipeline."
"JOE continues to acquire office buildings in the Southeast
through our investment strategy which defers taxes on land sale gains
by the redeployment of proceeds from large land sales," said Twomey.
"We expect to grow this portfolio by $75 million to $100 million in
2004 through acquisitions of additional properties."
St. Joe Land Company
"We also expect continued good results from the St. Joe Land
Company at or near the same level as in 2003," said Twomey. "The
RiverCamps concept has proved very popular with people who are seeking
a community in a natural setting. We believe that RiverCamps will
become a meaningful source of income in future years."
"We start the year with a good pipeline of Land Company
transactions," said Twomey. "We have a small number of large land-sale
transactions moving through the pipeline. However, the timing of these
large sales is always difficult to predict."
"We also have a good pipeline of conservation land sales, and
expect 2004 results to be above 2003's performance," said Twomey.
"Again, the timing of these transactions is uncertain."
DIVIDENDS
On December 1, 2003, the board of directors declared a quarterly
cash dividend for the fourth quarter of 2003 of $0.12 per share on its
common stock, payable on December 31, 2003, to shareholders of record
at the close of business on December 15, 2003. Including the fourth
quarter dividend, the company paid $0.32 per share in dividends in
2003.
SALE OF TRUST SHARES
During 2003, the Alfred I. duPont Testamentary Trust and the
Nemours Foundation (the Trust) sold 1,085,374 shares to the company
and 11,000,000 shares to the public, bringing their percentage
ownership of JOE from 47.4 percent on December 31, 2002 to 31.5
percent on December 31, 2003. The Trust's ownership position was 69.8
percent on January 1, 1997.
On December 31, 2003, the company filed a shelf registration
statement covering an additional 6 million shares for sale by the
Trust.
STOCK REPURCHASE PROGRAM
During 2003, JOE acquired 3,367,976 shares of common stock for a
total of $102.9 million, or an average price of $30.55 per share. This
represents approximately 4.4 percent of the shares outstanding on
December 31, 2002.
During the fourth quarter of 2003, the company repurchased
1,008,922 shares for a total of $33.9 million, or an average price of
$33.62 per share.
During the fourth quarter of 2003, the company acquired 470,918
shares, for $15.7 million, that were surrendered by executives to pay
taxes and the option exercise price for stock they acquired through
option exercises. For the full year 2003, a total of 812,802 shares
were surrendered by executives for $25.6 million to pay taxes and the
option exercise price for stock they acquired through option exercise
and vesting of restricted shares.
Table 3 summarizes stock repurchase activity through December 31,
2003.
Table 3
Stock Repurchase Activity
Through December 31, 2003
Shares
------------------------------------------------------
Purchased Purchased Surrendered By
Year From Public From Trust Executives Total
- ------- ------------ ------------ --------------- ------------
1998 2,574,200 -- 11,890 2,586,090
1999 2,843,200 -- 11,890 2,855,090
2000 3,101,566 415,500 -- 3,517,066
2001 3,485,400 3,585,900 58,550 7,129,850
2002 2,583,700 2,586,206 256,729 5,426,635
2003 1,469,800 1,085,374 812,802 3,367,976
------------ ------------ --------------- ------------
Total 16,057,866 7,672,980 1,151,861 24,882,707
============ ============ =============== =============
Total Cost Average
Year (in millions) Price
- ----- ------------- ---------
1998 $55.5 $21.41
1999 69.5 24.31
2000 80.2 22.78
2001 176.0 24.67
2002 157.6 29.03
2003 102.9 30.55
------------ ---------
Total $641.8 $25.77
============ =========
At the end of 2003, $43.2 million remained of the company's
current stock repurchase authorization of $150 million.
At December 31, 2003, the company had 76,030,091 shares
outstanding. The number of weighted-average fully diluted shares was
77,825,790 for the year 2003 and 77,783,671 for the fourth quarter of
2003.
WEST BAY SECTOR PLAN
On December 11, 2003, the Bay County Commission voted to approve a
measure that included two land-use plans: one for the proposed
relocation of the Panama City - Bay County International Airport on
4,000 acres in western Bay County, and one for commercial, industrial,
residential and conservation uses on 16,556 acres of St. Joe land near
the proposed airport site.
The two land use plans, known as the Airport and West Bay DSAPs,
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 number of additional
regulatory steps remain before the two DSAPs become final, including
additional review by the Florida Department of Community Affairs to
determine if they are in compliance with state law.
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. Subject to final approvals of the airport relocation at
West Bay, St. Joe has committed to donating the 4,000-acre airport
site to the Airport Authority as well as approximately 10,000 acres
for environmental mitigation that would become part of the West Bay
Conservation Area.
The 4,000 acre Airport DSAP provides for a terminal, runways and
ancillary facilities associated with an airport. The West Bay DSAP
consists of three phases. Phase 1, which operates independently of the
approvals of the airport, provides for 685 residential units, 360,000
square feet of commercial space and a 150-room hotel. Phases 2 and 3
are conditioned on the final approvals of the 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 and 490 hotel rooms.
Taken together, the two DSAPs provide land use changes for
approximately 20,000 acres of St. Joe property.
In addition to the mitigation lands for the airport, St. Joe
committed to donate lands for public facilities in connection with
development activities in phases two and three in the West Bay DSAP.
These lands include sites for five public schools, two regional parks,
a wastewater treatment plant, libraries, right-of-way donations and
public safety facilities.
ENTITLEMENTS
St. 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 4 summarizes the entitled St. Joe residential projects at
December 31, 2003.
Table 4
Summary of Entitled St. Joe Residential Projects in Florida
December 31, 2003
Units
Total Total Sold/Under
Project County Project Project Contract
Acres Units(a) Thru
12/31/03
- ------------------------ -------------- -------- -------- -----------
Artisan Park - Celebration Osceola 160 616 57
CampCreek Golf Cottages Walton 10 50 0
The Hammocks Bay 143 459 232
Hampton Park Duval 150 158 130
James Island Duval 194 365 359
Palmetto Trace Bay 138 523 192
Pier Park (Residential) Bay 10 125 0
RiverCamps on Crooked
Creek (Release One) Bay 95 27 23
SouthWood Leon 3,770 4,770 588
St. Johns Golf & County
Club St. Johns 820 799 519
Victoria Park Volusia 1,859 4,000+ 359
Walton Corners Leon 60 33 0
WaterColor Walton 499 1,140 717
WaterSound Beach Walton 256 499 293
WaveCrest Bay 6 88 0
WindMark Beach Gulf 80 110 100
-------- -------- -----------
Total 8,250 13,762+ 3,569
======== ======== ===========
(a) 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.
St. Joe's pipeline of residential projects extends well into the
future with 14,714 units at various stages in the entitlement process.
Table 5 summarizes the status of St. Joe residential projects in the
entitlement process as of December 31, 2003.
Table 5
Summary of St. Joe Residential Projects in the
Entitlements Process in Florida(a)
December 31, 2003
Total
Project County Project Approx.
Acres Units
- ------------------------------- ------------------ -------- -------
East Lake Powell Bay 181 360
WaterMill (Jones Homestead) Gulf 94 90
RiverCamps on Crooked Creek
(Future phases) Bay 1,395 423
RiverTown St. Johns 4,200 4,500
SummerCamp Franklin 782 499
Cutter Ridge (Tarpon Sound) Franklin 30 90
The Pines Walton 62 300
West Bay DSAP Bay 6,789 5,842
WaterSound Walton 1,443 1,060
WindMark Beach - Future Phase Gulf 2,000 1,550
-------- -------
Total 16,976 14,714
======== =======
(a)All developments listed have entitlement steps remaining that
could affect timing, scale and viability.
At the end of the year, the number of units in Florida residential
projects entitled or in the entitlement process approached 25,000
units on approximately 23,000 acres as summarized in Table 6.
Table 6
Summary of Residential Projects Pipeline
December 31, 2003
Total Acres Total Units
------------ -----------
Entitled residential projects 8,250 13,762
Less acres and units sold (2,234)(a) (3,569)
Residential projects in entitlements process 16,976 14,714
------------ -----------
Total residential projects pipeline 22,992 24,907
============ ===========
(a)Estimated
SEGMENT RESULTS
COMMUNITY DEVELOPMENT
The Community Development division's pretax income from continuing
operations for the full year 2003 was $80.6 million, compared with
$60.8 million for the full year 2002, a 33 percent increase. For the
fourth quarter of 2003, pretax income was $13.2 million, compared with
$19.9 million in the fourth quarter of 2002.
"Demand was strong in the fourth quarter for homes and home sites
in JOE's resort and primary communities," said Rummell. "We are
particularly pleased with the strength of pricing at WaterColor and
WaterSound Beach - especially considering that we are moving further
inland, away from the beach."
Table 7 summarizes community development sales activity. Table 8
summarizes unit backlog.
Table 7
Community Development Sales
($ in millions)
Units Closed
For the Three Months
Ended December 31,
2003 2002
---------------------------- -----------------------------
Number Revenue Gross Profit Number Revenue Gross Profit
------- ------- ------------ ------ --------- ------------
Closing
Home Sites 114 $24.3 $15.4 140 $33.3 $20.7
Homes 413 105.1 15.9 324 92.2 15.7
------- ------- ------------ ------ --------- ------------
Total 527 $129.4 $31.3 464 $125.5 $36.4
======= ======= ============ ====== ========= ============
Units Closed
For the Year
Ended December 31,
2003 2002
---------------------------- -----------------------------
Number Revenue Gross Profit Number Revenue Gross Profit
------- ------- ------------ ------ --------- ------------
Closing
Home Sites 519 $115.7 $72.2 438 $99.3 $65.1
Homes 1,241 348.4 60.6 1,079 271.3 44.7
------- ------- ------------ ------ --------- ------------
Total 1,760 $464.1 $132.8 1,517 $370.6 $109.8
======= ======= ============ ====== ========= ============
Units Placed Under Contract
For the Three Months
Ended December 31,
2003 2002 Percentage Change
--------- --------- --------------------
Home Sites 125 69 81.2%
Homes 374 306 22.2%
--------- --------- --------------------
Total 499 375 33.1%
========= ========= ====================
Table 8
Unit Backlog(a)
At December 31,
($ in millions)
Backlog - Units Backlog - Sales Price
----------------------- -----------------------
2003 2002 2003 2002
---------- ----------- ----------- ----------
Home Sites 94 23 $20.6 $5.8
Homes 730 534 $223.7(b) $172.3
---------- ----------- ----------- ----------
Total 824(b) 557 $244.3 $178.1
========== =========== =========== ==========
(a) Backlog represents units under contract but not yet closed.
(b) Includes 50 WaterSound multifamily units at an average price of
$1.1 million scheduled to close in the first quarter of 2004.
Northwest Florida
WaterColor
In the fourth quarter of 2003, 48 home sites and 8 housing units
closed at WaterColor. During the quarter, contracts were accepted for
64 home sites, 3 housing units and 23 Private Residence Club units at
average prices of $244,000, $750,000 and $190,000, respectively.
For the year 2003, 206 home sites and 30 homes closed at
WaterColor at average prices of $280,000 and $674,000, respectively.
At the end of the year, 7 home sites remained in phase 1, of which
only one has been released for sale. In phase 2, 3 home sites and 12
homes remained for sale. The average sales price for home sites in
phase 2 during 2003 was $244,000 for 220 home sites, while the average
sales price for homes was $784,000 for 7 JOE-built homes.
At the end of the year, 112 home sites and 3 homes remained for
sale in WaterColor's phase 3. This phase is enhanced by a connection
to the first phase of WaterColor with a pedestrian bridge that spans
Western Lake. Construction of the bridge was completed in the fourth
quarter of 2003.
"Sales in WaterColor's phase 3 continued to build momentum in the
fourth quarter," said Rummell. "Values from the WaterColor
neighborhoods closer to the beach are being transferred to those areas
further inland." The average sales price for the 117 home sites in
phase 3 sold during 2003 was $296,000, while the price for the one
home sold there was $783,000.
During the fourth quarter, planning was started on phase 4 of
WaterColor, a 60-acre parcel on the east side of County Road 395
adjacent to WaterColor Crossings. Construction in phase 4 is scheduled
to begin in late 2004.
"The WaterColor Inn's high visibility across the region is also
helping drive demand for our real estate products," said Rummell. "We
believe the Inn is a key marketing force for our real estate products
not just at WaterColor but throughout Northwest Florida."
From WaterColor's inception through December 31, 2003, contracts
accepted or closed totaled 717 units. WaterColor is expected to have
up to 1,140 units at full build-out.
WaterSound Beach
In the fourth quarter of 2003, 18 home sites and 30 housing units
closed at WaterSound Beach at average sales prices of $345,000 and
$1.2 million, respectively. During the quarter, contracts were
accepted for 5 home sites at an average price of $360,000.
For the year 2003, 93 home sites and 30 residential units were
closed at WaterSound Beach at average prices of $393,000 and $1.2
million, respectively.
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 multi-family units. It is expected to have 499
residential units at full build-out.
The Crossings at WaterSound Beach and Compass Point are
multifamily neighborhoods in WaterSound Beach. Thirty of the 81
beachfront units in The Crossings closed in the fourth quarter of
2003. Another 50 units are expected to close in the first quarter of
2004. Prices for these 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 multi-family units.
Based on the rapid sale of units at The Crossings, additional
phases of multi-family units are being planned. This new multi-family
neighborhood, Compass Point, is planned for 92 units in four phases.
In the fourth quarter, 7 units were placed under contract in the first
release of 25 Compass Point units with prices expected to average over
$1.3 million per unit. Construction is slated to begin in 2004 on the
first 25 Compass Point residences plus a second phase of multi-family
residences planned for 24 units to be released later in 2004, followed
by 43 units planned for later years.
At the end of 2003, 113 single family home sites have not been
released for sale, including 8 beachfront home sites.
The Southern Accents 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, will be featured in the
July/August 2004 issue of the magazine.
From WaterSound Beach's inception through December 31, 2003,
contracts accepted or closed totaled 293 units.
WaterSound
On October 7, 2003, the Walton County Commission voted to approve
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 quarter of 2004. Work continues on a Development of Regional
Impact (DRI) application for the project that would include the
balance of the units. Significant 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 six and
nine-hole golf courses 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."
Palmetto Trace, The Hammocks
In the fourth quarter of 2003, contracts closed for 46 homes at
St. Joe's two primary home communities in Bay County, Palmetto Trace
and The Hammocks. These contracts closed at an average price of
$160,000. During the quarter, contracts were accepted for 36 homes at
an average price of $145,000.
For the year 2003, 30 home sites and 136 homes were closed in
these two communities at average prices of $30,000 and $150,000,
respectively. Palmetto Trace is planned for 523 units on 138 acres.
The Hammocks is planned for 463 units on 143 acres.
"Sales at these two communities were very strong in the fourth
quarter," said Rummell. "The sales pace of primary homes and home
sites in Bay County almost doubled in 2003 compared to 2002. We expect
these increases in sales velocity to continue in 2004 as new jobs are
added to the Bay County economy."
From the inception of Palmetto Trace and The Hammocks through
December 31, 2003, contracts were accepted and contracts closed for 66
home sites and 358 homes at average prices of $31,000 and $147,000,
respectively.
WindMark Beach
In the fourth quarter of 2003, no home sites closed and no new
contracts were accepted at the first phase of WindMark Beach. For the
year 2003, 13 home sites closed at an average price of $567,000. This
phase includes 110 home sites, a pool club and several community
docks, as well as an extensive conservation area accessible by
boardwalks and trails.
"Pricing and sales velocity for this first phase of WindMark Beach
have been a real success," said Rummell. "Resale activity has also
been strong. In the fourth quarter, a beachfront home site was resold
for more than $1 million."
"Since we believe values will continue to increase at WindMark
Beach, we are carefully managing the release of additional home sites
there," said Rummell. "We plan to release only four home sites for
sale in 2004, two on the beach and two with beach views. In addition,
JOE has two remaining beachfront home sites in phase 1 that we expect
to release for sale in future years."
From WindMark Beach's inception through December 31, 2003, St. Joe
accepted or closed contracts for 100 home sites at an average price of
$334,000.
WindMark Beach, Future Phases
St. Joe has started predevelopment planning for future phases of
WindMark Beach with 1,550 units on approximately 2,000 acres of
timberland along 15,000 feet of beachfront owned by St. Joe.
Significant progress on the DRI for WindMark Beach is expected by
mid-2004, and environmental permitting is expected to continue to the
end of the year. Sales at these future phases of WindMark Beach are
expected to begin in 2005.
"Under the proposed master plan, WindMark Beach embraces, restores
and protects a beautiful beach and makes it accessible to the public
with activities that center on family fun," said Rummell. "Together
with the Gulf County community, we are planning WindMark Beach so that
it respects the local culture, landscape, architecture and the
environmentally special lands nearby."
Plans for the future phases of WindMark Beach provide that once a
portion of U.S. 98 is relocated, the existing roadbed through St.
Joe's land would be used to create a beachfront trail system. No
residential development is planned seaward of this beachfront trail,
and St. Joe will provide public beach parking areas and multiple
access points for the public.
SouthWood
In the fourth quarter of 2003, 13 home sites and 34 homes closed
at SouthWood at average prices of $83,000 and $241,000, respectively.
During the quarter, contracts were accepted for 12 home sites and
31 homes at SouthWood at average prices of $86,000 and $232,000,
respectively. For the year 2003, 63 home sites and 133 homes closed at
SouthWood at average prices of $90,000 and $203,000, respectively.
"Sales traffic at SouthWood remained steady in the fourth quarter
and conversion rates remained high," said Rummell. "SouthWood is
generating a market share of new homes sold in Leon County of
approximately 25 percent. We continue to introduce new single and
multi-family product lines within the community to extend our reach to
a greater cross section of this population."
The SouthWood Golf Course, designed by Fred Couples, was named one
of the top three of more than 500 new upscale public golf courses in
the United States by Golf Digest magazine in January 2004. It was the
only new upscale golf course in Florida to be honored in the magazine.
From SouthWood's inception through December 31, 2003, St. Joe
accepted or closed contracts on 588 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
During the fourth quarter, final land-use approvals were received
for SummerCamp, a new beachfront vacation and second-home community in
southeastern Franklin County on St. James Island. With nearly 4 miles
of waterfront, SummerCamp is planned for 499 units on 782 acres of St.
Joe timberland. Certain regulatory steps remain, including approval of
environmental permit applications. Infrastructure construction is
expected to begin in the third quarter of 2004.
Initial marketing for SummerCamp has begun. A sales preview center
located in Tallahassee, an important market for SummerCamp, is
expected to open 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.
Home prices are expected to range initially from the mid $400,000s
to over $900,000, and home sites are expected to start in the $150,000
range to over $800,000.
"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."
St. James Island
The St. James Island public visioning process for St. Joe's future
development plans that began early in the fourth quarter of 2003 is
continuing with good participation from the community. 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 take
into account 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 St. 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 being developed on a 782-acre parcel in
St. James Island.
Northeast Florida
St. Johns Golf & Country Club
In the fourth quarter of 2003, contracts were closed on 11 home
sites and 41 homes at St. Johns Golf & Country Club. Contracts were
accepted for 19 home sites and 31 homes at average prices of $116,000
and $351,000, respectively.
For the year 2003, 40 home sites and 124 homes were closed at St.
Johns Golf & Country Club at average prices of $56,000 and $319,000,
respectively.
"Pricing was strong in the second half of 2003 at St. Johns Golf
and Country Club," said Rummell. "Sales velocity was also strong with
conversion rates, from prospect to contract closing, building from
mid-2003 into the first quarter of 2004. As new companies relocate to
the Jacksonville area, St. Johns is proving to be an attractive living
alternative for their employees."
"This year we are introducing a product line with homes priced
from $180,000 to $220,000," said Rummell. "Based on the preliminary
interest, we expect it to be well received."
From inception through December 31, 2003, St. Joe accepted or
closed contracts for 519 units at this 799-unit residential
development south of Jacksonville in St. Johns County.
Hampton Park
In the fourth quarter of 2003, contracts closed on 20 homes at
Hampton Park in Jacksonville at an average price of $329,000.
Contracts were accepted for 18 homes with home prices averaging
$382,000.
For the year 2003, 50 homes were closed at Hampton Park at an
average price of $321,000.
From Hampton Park's inception through December 31, 2003, contracts
accepted or closed totaled 130 units.
James Island
In the fourth quarter of 2003, contracts closed on 13 homes at
James Island in Jacksonville at an average price of $339,000.
Contracts were accepted for 6 homes with home prices averaging
$421,000. The six units remaining, including three models and three
homes under construction, in the 365-unit development are expected to
be sold or under contract by the end of the second quarter of 2004.
For the year 2003, 59 homes were closed at James Island at an
average price of $335,000.
RiverTown
RiverTown, located in St. Johns County on approximately 4,200
acres, is being planned for approximately 4,500 units. The proposed
community has 3.5 miles of frontage on the St. Johns River.
"RiverTown is located on one of the last stretches of riverfront
in Northeast Florida suitable for large-scale residential
development," said Rummell. "It is located within easy commuting
distance to Jacksonville. We believe JOE's ability to provide
high-value community developments can provide a unique product in this
market."
Entitlement work continued on RiverTown during the fourth quarter
with significant progress toward DRI approval. DRI review is expected
to continue another 2 to 6 months, while environmental permitting is
expected to continue into 2005. Sales are planned to begin in 2005.
Central Florida
Victoria Park
During the fourth quarter of 2003, contracts closed on 6 home
sites and 48 homes at Victoria Park at average prices of $73,000 and
$193,000, respectively. Contracts were accepted for 7 home sites and
27 homes at average prices of $83,000 and $206,000, respectively.
For the year 2003, 32 home sites and 124 homes were closed at
Victoria Park at averages prices of $74,000 and $196,000,
respectively.
"The improved sales pace at Victoria Park continued in the fourth
quarter," said Rummell. "The community 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 December 31, 2003,
contracts accepted or closed totaled 359 units.
Celebration, Artisan Park
In the fourth quarter of 2003, 5 home sites were closed at an
average price of $134,000 at Artisan Park, a 160-acre village in the
town of Celebration near Orlando. St. Joe owns 74 percent of the joint
venture that is developing Artisan Park. During the fourth quarter,
contracts were accepted for 5 home sites and 34 homes at average
prices of $134,000 and $369,000, respectively.
For the year 2003, 10 home sites were closed at Artisan Park at an
average price of $128,000.
"Artisan Park opened with excellent sales," said Rummell. "This is
one of the last residential neighborhoods to be developed in
Celebration, and there appears to be strong demand as the development
of Celebration comes to an end."
Plans for the neighborhood feature approximately 314 single-family
homes plus 302 condominium homes, along with parks, trails, an outdoor
performance area and community clubhouse with a fitness center, pool
and educational and recreational programs.
Saussy Burbank
In the fourth quarter of 2003, Saussy Burbank, St. Joe's
homebuilder based in Charlotte, N.C., closed the sale of 173 homes
compared to 169 homes in the fourth quarter of 2002. Average prices
for the homes were $212,000 and $197,000, respectively. During the
fourth quarter, contracts were accepted for the purchase of 13 homes
sites and 165 homes at average prices of $24,000 and $200,000,
respectively.
For the year 2003, 32 home sites and 555 homes were closed by
Saussy Burbank at average prices of $24,000 and $209,000,
respectively.
COMMERCIAL REAL ESTATE
The Commercial segment consists of St. Joe Commercial, the
company'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 $6.5 million for
the fourth quarter of 2003, compared with $4.6 million in the same
quarter of 2002. For the year, the Commercial segment had a pretax
loss of $2.4 million, due to the non-cash Advantis charge of $14.1
million pretax taken in the second quarter of 2003, compared to income
of $3.0 million for the year 2002.
St. Joe Commercial
"St. Joe Commercial has completed a very successful fourth quarter
both in terms of value creation and strategic accomplishments," said
Twomey. "Gross proceeds from Northwest Florida commercial land sales
totaled $10.5 million. 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 timing of transactions
is very difficult to predict."
For the fourth quarter of 2003, St. Joe Commercial had pretax
income of $6.6 million, compared to $3.8 million in the fourth quarter
a year ago. For the year 2003, pretax income was $15.4 million,
compared to $4.5 million in 2002.
During the fourth quarter of 2003, St. Joe Commercial sold 13
Florida land parcels, totaling 161 acres, at an average price of
approximately $65,000 per acre. For the year 2003, St. Joe Commercial
sold 48 Florida land parcels, totaling 396 acres, at an average price
of approximately $62,000 per acre.
On December 30, 2003, St. Joe Commercial closed a $3.8 million
sale of a 24-acre parcel of land located in Panama City Beach to
Ashwood Development Group. Ashwood is planning a 300-unit multi-family
project on the parcel adjacent to Lake Powell. St. Joe and Ashwood are
working closely to formulate a development plan for the parcel that
respects both the environmental significance of Lake Powell and the
growing demand for high quality multi-family residential communities
in Panama City Beach.
"During the fourth quarter, The Home Depot purchased a new store
site in Panama City Beach from JOE," said Twomey. "This sale has broad
implications. As more national retail users become familiar with this
part of Florida, the value for land suitable for retail use continues
to move closer to comparable prices for such land in other parts of
the state. We believe there is room for additional growth in Northwest
Florida, and we are working to harvest the untapped potential for
additional value and velocity."
Tables 9 and 10 summarize commercial land sales in Florida for the
fourth quarter and full year 2003.
Table 9
St. Joe Commercial
Florida Land Sales
Quarter Ended December 31, 2003
Number of Gross Sales Average
Land Sales Acres Price Price/Acre
Sold (in thousands) (in thousands)
- ------------ ----------- --------- --------------- ---------------
Unimproved 5 116 $7,066 $61
Improved 8 45 3,436 76
---------- --------- --------------- ---------------
Total/Average 13 161 $10,502 $65
========== ========= =============== ===============
Table 10
St. Joe Commercial
Florida Land Sales
Year Ended December 31, 2003
Average
Number of Gross Sales Price/Acre
Land Sales Acres Sold Price (in thousands)
(in thousands)
- ------------ --------- ---------- --------------- ---------------
Unimproved 18 267 $13,116 $49
Improved 30 129 11,460 89
--------- ---------- --------------- ---------------
Total/Average 48 396 $24,576 $62
========= ========== =============== ===============
Progress on various St. Joe Commercial projects is summarized
below.
Northwest Florida
WaterColor Crossings
A new 28,800-square-foot Publix Super Market at WaterColor
Crossings opened on January 14, 2004. The center has an additional
14,400 square feet of retail space, expected to be completed in
February 2004, and three out-parcels for retail operations.
"WaterColor Crossings, designed to be a second town center, is
helping to make WaterColor a true community where people can live and
build family connections," said Twomey. "In only a few weeks of
operation, the new Publix is demonstrating the importance of providing
the kind of convenience and service that mark a permanent
neighborhood."
Highland Commons
During the fourth quarter, The Home Depot purchased a 13-acre
retail development site in Highland Commons, near Beckrich Office
Park, for $2 million. Home Depot plans include a 105,000-square-foot
store and 35,000-square-foot garden center. Site and infrastructure
construction work has started at the site and construction of the
store is expected to begin later in the first quarter of 2004. The new
Home Depot store is expected to be operational in late 2004.
St. Joe Commercial continues additional development planning on
Highland Commons, a 99-acre mixed-use project in Panama City Beach
being designed for retail and multi-family users of various sizes.
Current plans call for an additional 13 parcels designed for retail
users and 4 parcels designed for multi-family use.
"With this Home Depot in place, St. Joe Commercial believes that
Highland Commons can become an important regional shopping area by
attracting other 'big-box' retailers and smaller retail stores," said
Twomey.
Pier Park
Horizontal infrastructure construction and installation was
substantially completed in the fourth quarter at Pier Park, a
mixed-use project in Panama City Beach. Pier Park is a public/private
venture between St. Joe and the City of Panama City Beach with plans
featuring retail, dining and family entertainment venues. Adjacent to
six acres of white-sand beach, the project has 50 acres of land
available for these uses near the beach, plus hotel and timeshare
sites, and 70 acres of highway-oriented commercial land.
"A highly qualified general manager for the project started work
during the fourth quarter," said Twomey. "We brought to Pier Park one
of the nation's experts in this type of real estate development. Now
with approximately $15 million in infrastructure completed, Pier Park
is ready for vertical development. We expect to make significant
progress on Pier Park in 2004. We believe Pier Park can become a major
destination for visitors and residents of the Panama City Beach area."
Already completed at Pier Park are a 500-space beach parking lot,
an 82-acre expansion of adjacent Bessant Park with an amphitheater and
a 30-acre expansion of Frank Brown Park.
Beckrich Office Park
During the fourth quarter, construction was completed on Beckrich
Two, a 35,000-square-foot office building in the Beckrich Office Park
in Panama City Beach. Advantis is handling leasing and marketing for
the project.
In November 2003, Nextel Partners announced the expansion of their
operations at Beckrich from approximately 600 employees to 1,000. St.
Joe broke ground on a 30,000-square-foot building in January 2004 to
house the new workforce. The new building is located adjacent to the
existing 67,500-square-foot customer care center that opened in May of
2002.
"This office park is designed to be a magnet for quality jobs that
pay good salaries year round to area residents," said Twomey. "Today,
with approximately 200 employees in Beckrich One and Two, almost 800
people come to work each day on this 29-acre business campus with an
additional 400 Nextel employees on the way. With that accomplished in
under two years, our strategy is working."
St. Joe Commerce Parks
St. Joe Commercial has 10 commerce parks operating or under
development in six Northwest Florida counties. During the fourth
quarter, sales within the commerce parks totaled $1.9 million. With
master plans that were created to transfer value from the frontage of
major highways inland, St. Joe Commercial is adding value to interior
timberlands, while at the same time improving traffic flows.
During the fourth quarter, the first sale at Hammock Creek
Commerce Park in Gadsden County closed for $760,000, or $33,000 per
acre. In addition, the first sale at Nautilus Business Park in Bay
County closed for $530,000, or $370,000 per acre. During the fourth
quarter, prices advanced at both the Beach and the Port St. Joe
Commerce Centers.
Table 11 summarizes the status of St. Joe commerce parks
throughout Northwest Florida at December 31, 2003.
Table 11
St. Joe Commercial - Commerce Parks
December 31, 2003
Net Acres Current Asking
Commerce Parks County Saleable Sold/ Price Per Acre
Acres Under
Contract
- ----------------- ----------- --------- --------- -------------------
Existing
Beach Commerce Bay 161 69 $65,000 - 435,000
Port St. Joe Gulf 58 43 $45,000 - 50,000
Airport Commerce Leon 40 -- $75,000 - 260,000
Nautilus Business
Park Bay 12 1 $300,000 - 375,000
Hammock Creek Gadsden 114 24 $40,000 - 150,000
Predevelopment
South Walton
County Walton 42 -- $125,000 - 435,000
Beach Commerce II Bay 140 -- $75,000 - 80,000
Cedar Grove Bay 150 -- $35,000 - 45,000
Port St. Joe II Gulf 45 -- $35,000 - 45,000
Apalachicola
Commerce Franklin 50 -- $30,000 - 35,000
--------- ---------
Total 812 137
========= =========
Investment Property Portfolio
St. Joe continues to redeploy the proceeds of land sales in a
tax-deferred manner through the acquisition of commercial office
buildings in select markets within the southeastern United States. In
the fourth quarter of 2003, St. Joe acquired three office buildings in
Atlanta with 465,000 square feet. These buildings are 90 percent
leased.
At December 31, 2003, St. Joe's portfolio of commercial office
buildings acquired through the capital redeployment program totaled
more than 2.3 million square feet and represented an aggregate
investment of more than $312 million, compared to approximately 1.6
million square feet and an aggregate investment of $219 million at
December 31, 2002.
"While the national office market remains soft, the level of
leasing activity has increased on our Investment Property Portfolio
over the past six months," said Twomey. "The average leased percentage
for the portfolio has increased to 86 percent at year-end from 81
percent at the end of the second quarter of 2003. The primary drivers
of this improved performance in the second half of the year are the
increased level of activity in the Orlando and Atlanta markets, along
with the impact of our acquisitions in this time period."
Table 12 summarizes the investment property portfolio at December
31, 2003.
Table 12
Investment Property Portfolio
December 31, 2003
Number of Net Rentable Leased
Location Properties Square Feet Percentage
- ----------------------- ------------- --------------- -------------
Florida
Tampa 5 476,000 83%
Orlando 2 313,000 78%
Other 3 222,000 82%
Atlanta 5 863,000 87%
Washington, D.C. 2 271,000 94%
Charlotte 1 158,000 100%
------------- --------------- -------------
Total/Weighted Average 18 2,303,000 86%
============= =============== =============
Development Properties Portfolio
At the close of 2003, St. Joe had reduced its portfolio of
development properties from 1.3 million square feet at the end of 2000
to 0.6 million square feet. "We continue to make progress toward our
goal of monetizing our development portfolio when commercial buildings
are stabilized or in markets where we do not have significant
competitive advantages," said Twomey. "Efforts continue to sell our
land positions outside of Florida, with several sales expected in
2004."
Table 13 summarizes the development property portfolio at December
31, 2003.
Table 13
Development Property Portfolio
December 31, 2003
Market Ownership Net Leased
Property Location Percentage Rentable Percentage
Square
Feet
---------------- --------------- ---------- --------- ----------
TNT Logistics Jacksonville 100% 99,000 83%
245 Riverside Jacksonville 100% 134,000 39%
Alliance Bank Orlando 50% 71,000 61%
Deerfield Commons I Atlanta 40% 122,000 77%
Westchase Corporate Houston 93% 184,000 94%
Beckrich Two Panama City
Beach 100% 34,000 20%
--------- ----------
Total/Weighted Average 644,000 70%
========= ==========
Sale of 355 Alhambra
On December 31, 2003, St. Joe completed the sale of its 45 percent
partnership interest in the 355 Alhambra building in Coral Gables,
Florida for $6.3 million (a gain of approximately $1.0 million). The
224,000-square-foot Class A office building was completed in 2001 and
is currently 65 percent leased.
Advantis
Advantis, JOE's commercial real estate services unit, had a
positive fourth quarter with pretax income of $0.7 million before
elimination of inter-company profits. Advantis had a pretax loss of
$0.1 million for fourth quarter 2003, compared to income of $0.8
million in the fourth quarter of 2002, after elimination of
inter-company profits of $0.8 million and $0.3 million, respectively.
For the year 2003, Advantis had a pretax loss of $17.8 million,
including a non-cash charge of $14.1 million, compared to a loss of
$1.5 million in 2002, after elimination of inter-company profits of
$2.0 million and $1.3 million, respectively.
"As we look ahead to 2004, Advantis has put in place a strong
pipeline of business," said Twomey. "The talent recruited in the last
two years is starting to show results."
ST. JOE LAND COMPANY
St. Joe Land Company's pretax income from continuing operations
was $18.8 million in the fourth quarter of 2003, compared with pretax
income of $7.8 million in the fourth quarter of 2002.
For the year 2003, St. Joe Land had pretax income of $42.1
million, compared to $38.0 million in 2002.
"The year 2003 was St. Joe Land's best year yet," said Twomey.
"The traditional flow of small transactions was strong in 2003 and
continued to build momentum as the fourth quarter closed. The success
of the fourth quarter and the year was capped by the completion of a
large transaction in Franklin County. St. Joe Land looks ahead to 2004
with a strong pipeline of business in place."
Table 14 summarizes sales activity at St. Joe Land for the fourth
quarter and full year 2003 and 2002.
Table 14
St. Joe Land Company
Quarter Ended December 31
Number Number of Average Price Gross Sales Gross Profit
Period of Sales Acres Per Acre Price (in millions)
(in millions)
- ------ --------- --------- ------------- -------------- -------------
2003 37 11,405 $1,973 $22.5 $19.6
2002 52 4,977 $2,383 $11.9 $10.3
St. Joe Land Company
Year Ended December 31
Number Number of Average Price Gross Sales Gross Profit
Period of Sales Acres Per Acre Price (in millions)
(in millions)
- ---------------- --------- ------------- -------------- -------------
2003 166 29,904 $1,874 $56.0 $47.6
2002 176 28,071 $1,820 $51.1 $44.1
St. Joe Land
The Box R
In the fourth quarter of 2003, St. Joe Land sold 7,597 acres in
Franklin County called the Box R Ranch to The Nature Conservancy for
$14.9 million, or $1,965 per acre. "This transaction highlights the
cooperation and teamwork between the Land Company and Conservation
Land divisions," said Twomey. "While the property was widely marketed
by St. Joe Land and there were several prospective traditional private
buyers interested in the property, the overall best offer was made by
a conservation buyer. This sale resulted in an added benefit for the
future generations in Northwest Florida."
Rural Communities
Entitlement work continued on several rural communities in
Northwest Florida. Jones Homestead in Gulf County, renamed WaterMill,
is being designed for the local market with 120 home sites on 33
acres. Tarpon Sound in Franklin County, renamed Cutter Ridge, is being
designed for the same market with 83 lots 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. St. Joe Land plans
to provide home sites to area residents and residential contractors.
RiverCamps
In the fourth quarter of 2003, contracts for all 23 home sites of
the first release at RiverCamps on Crooked Creek closed at an average
price of approximately $150,000.
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. RiverCamp home sites are being sold
fee-simple, with a common area preserved for conservation. Many home
sites are one acre or larger.
A total of 314 potential buyers from 22 states submitted offers
for the first release of 23 home sites. A lottery process, requiring a
$7,500 deposit, was implemented to choose buyers. All of the buyers
originally chosen in the lottery process closed the sale of a home
site.
Home-site prices in the first release ranged from $84,000 to
$249,000. The most expensive, a one-acre home site with a view of
Crooked Creek, was the number one choice in the lottery with 47
prospective buyers. Construction of infrastructure and a RiverCamps
proto-type home is underway with three additional homes planned to
start in early 2004. Future releases of home sites for sale are
expected in mid-2004.
"This product is attracting a demographically diverse customer
base from a broad range of feeder markets extending as far away as
Minnesota, Wisconsin, California, Connecticut and Colorado," said
Rummell. "Still, we've only begun to tap the potential of RiverCamps.
In the first release, more than half of the potential buyers were from
Florida, with a majority of them from Northwest Florida."
Approved for approximately 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.
Additional RiverCamp locations are actively being reviewed in other
parts of Northwest Florida.
Ranches
Work continued in the fourth quarter on the launch of St. Joe
Ranches, a new real estate product designed to transform what were
once timberlands to higher and better uses. Ranches are for customers
who want to own 10 to 150 acres, with controls on how the property
around them is used. This product is 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 product 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. "To provide
consumer choice over time, we expect the ranch product line to expand
to a variety of specific products," said Twomey. "In addition, we are
working to bring the ranch 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
In the fourth quarter of 2003, 13,655 acres of conservation land
sold for a gross sales price of $16.0 million, or $1,172 per acre.
For the full year, 34,999 acres of conservation land sold for a
gross sales price of $40.5 million, or $1,157 per acre.
Table 15 summarizes conservations land sales for the year 2003.
Table 15
Conservation Land Sales
Year Ended December 31, 2003
Gross
Sales
Price Price
Quarter (in Per
Sold Project Buyer Location Acreage Millions) Acre
- ------ ------------- ---------- --------- -------- ---------- -------
1st Wacissa River State of Jefferson
West Florida County 13,917 $14.9 $1,071
2nd Wacissa River State of Jefferson
East Florida County 4,693 5.7 1,215
3rd Apalachicola City of Franklin
Parcel Apalach- County
icola 98 .3 3,134
3rd St. Marks Nature Wakulla
Conser- County
vancy 2,636 3.6 1,351
4th Wakulla River Shine Wakulla
Found- County
ation 292 1.3 4,500
4th Wakulla State of Wakulla
Springs B Florida County 103 .3 2,886
4th Crooked River State of Franklin
Florida 13,260 14.4 1,091
-------- ---------- -------
Total/Average 34,999 $40.5 $1,157
======== ========== =======
Conservation Land's pretax income from continuing operations for
the fourth quarter of 2003 was $14.4 million compared with $22.9
million for the fourth quarter of 2002. For the full year,
Conservation Land's pretax income from continuing operations was $36.4
million compared with $30.1 million in 2002.
From the Conservation Land program's inception through December
31, 2003, approximately 160,220 acres have been permanently preserved.
Activity is currently underway to sell 7 additional parcels in
2004, totaling approximately 58,000 acres, to state and private
conservation interests. "Two large conservation land sales of
approximately 43,000 and 10,000 acres are targeted to close in 2004,"
said Twomey. Additionally, 7 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.
ST. JOE TIMBERLAND COMPANY
Pretax income from continuing operations for the forestry segment
totaled $2.3 million for the fourth quarter of 2003, compared with
$2.0 million in the comparable 2002 period. For the year 2003, pretax
income from continuing operations totaled $8.1 million, compared with
$8.0 million in 2002.
FINANCIAL DATA
Pension Plan
At year-end 2003, the St. Joe Pension Plan was over-funded by
approximately $90.6 million, compared to an over-funded total of $76.0
million at the end of 2002. The Plan contributed $3.7 million to
pretax income in 2003.
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 $2.6 million in the fourth quarter of 2003, compared to income of
$35.4 million in the comparable 2002 period.
For the year 2003, other income (expense) was an expense of $9.2
million in 2003 compared to income of $120.6 million in 2002.
Table 16 summarizes other income (expense) for the fourth quarter
and year 2003 and 2002.
Table 16
Other Income (Expense)
(in millions)
Quarter Ended Year Ended
December 31, December 31,
-------------- --------------
2003 2002 2003 2002
------- ------ ------ -------
Dividend and interest income $0.1 $0.2 $0.8 $2.9
Interest expense (3.2) (3.2) (12.5) (17.0)
Gain (loss) on valuation of derivatives -- 0.1 -- (0.9)
Gain on forward sale of securities -- 38.2 -- 132.9
Other 0.5 0.1 2.5 2.7
------- ------ ------ -------
Total $(2.6) $35.4 $(9.2) $120.6
======= ====== ====== =======
Equity in Income (Loss) of Unconsolidated Affiliates
Equity in income (loss) of unconsolidated affiliates includes the
Arvida/JMB Partnership (Arvida/JMB) and several community residential
developments and commercial real estate partnerships. For the full
year 2003, the Company's share of the loss of Arvida/JMB was $3.5
million compared with income of $13.2 million for the full year 2002.
Equity in income (loss) of other unconsolidated affiliates was income
of $1.3 million for the full year 2003 compared to a loss of $2.2
million for the full year 2002. There was no income or loss recorded
in the fourth quarter of 2003 for our share of Arvida/JMB, compared to
an equity pick-up of $0.4 million in the fourth quarter of 2002. As
previously disclosed, we expect no further material income or loss
from Arvida/JMB. Equity in income (loss) of other unconsolidated
affiliates was income of $0.3 million for the fourth quarter of 2003,
compared to a loss of $0.7 million in the fourth quarter of 2002.
EBITDA for the Fourth Quarter and Year 2003
Earnings before interest, taxes, depreciation and amortization
(EBITDA) for 2003 were $170.0 million, or $2.18 per share, compared to
$325.9 million, or $4.01 per share, in 2002. Fourth-quarter 2003
EBITDA was $58.3 million, or $0.75 per share, compared to $97.4
million, or $1.23 per share, in the fourth quarter of 2002.
Table 17 provides a reconciliation of net income to EBITDA for the
fourth quarter and year 2003 compared to the same periods the year
before.
Table 17
Reconciliation of Net Income to EBITDA
(in millions)
Quarter Ended December 31, Year Ended December 31,
-------------------------- -----------------------
2003 2002 2003 2002
-------------- ----------- ----------- -----------
Net Income $28.9 $55.3 $76.2 $174.4
Plus:
Income tax
expense 14.5 29.6 42.8 104.1
Depreciation and
amortization 9.3 6.5 30.4 23.8
Interest expense 5.7 6.0 20.8 23.7
Minority interest (0.1) -- (0.2) (0.1)
-------------- ----------- ----------- -----------
EBITDA $58.3 $97.4 $170.0 $325.9
============== =========== =========== ===========
EBITDA per diluted
share $0.75 $1.23 $2.18 $4.01
============== =========== =========== ===========
Weighted average
diluted shares
outstanding 77,783,671 79,115,809 77,825,790 81,340,615
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. Results for 2002 include a
$132.9 million gain on forward sale of securities, a $33.7 million
gain on sale of ARS, a $0.9 million loss on valuation of derivatives
and $2.9 million other charges, each of which were previously excluded
from EBITDA. Results for 2003 include the non-cash Advantis charge of
$14.1 million. EBITDA includes conservation land EBITDA of $36.4
million and $30.1 million in 2003 and 2002, respectively. Results for
the fourth quarter of 2002 include a $38.2 million gain on the forward
sale of securities, a $0.1 million gain on valuation of derivatives
and $1.1 million other charges, each of which were previously excluded
from EBITDA. EBITDA includes conservation land EBITDA of $14.4 million
and $22.9 million in the fourth quarters of 2003 and 2002,
respectively.
Table 18
Summary Balance Sheet
(in millions)
Dec. 31, 2003 Dec. 31, 2002
------------- -------------
Assets
Investment in real estate $896.4 $806.7
Cash and investments 58.0 74.4
Prepaid pension asset 91.8 91.0
Property, plant and equipment 36.3 42.9
Other assets 194.2 154.9
------------- -------------
Total assets $1,276.7 $1,169.9
============= =============
Liabilities and Stockholders' Equity
Debt 382.2 320.9
Accounts payable, accrued liabilities 166.2 151.2
Deferred income taxes 232.5 212.0
------------- -------------
Total liabilities 780.9 684.1
Minority interest 8.2 5.7
Total stockholders' equity 487.6 480.1
------------- -------------
Total liabilities and stockholders' equity $1,276.7 $1,169.9
============= =============
Table 19
Debt Schedule
(in millions)
Dec. 31, 2003 Dec. 31, 2002
-------------- -------------
Revolving debt facility $40.0 $--
Medium term notes 175.0 175.0
Acquisition and other debt 4.0 4.1
Other collateralized/specific asset
related debt 163.2 141.8
-------------- -------------
Total Debt $382.2 $320.9
============== =============
Table 20
Consolidated Quarterly Comparisons
($ in millions except per share amounts)
Quarter Ended December 31, Year Ended December 31,
--------------------------- -----------------------
2003 2002 2003 2002
-------------- ------------ ----------- -----------
Revenues:
Real estate
sales $180.6 $187.7 $592.2 $484.0
Realty
revenues 19.9 17.4 62.5 58.5
Timber sales 8.3 9.0 36.6 40.7
Rental revenue 11.5 8.5 40.8 33.2
Other revenues 6.1 4.4 28.5 19.0
-------------- ------------ ----------- -----------
Total
revenues 226.4 227.0 760.6 635.4
-------------- ------------ ----------- -----------
Expenses:
Cost of real
estate sales 105.7 112.0 353.2 290.8
Cost of realty
revenues 12.3 9.9 36.2 33.2
Cost of timber
sales 4.9 6.1 24.2 28.9
Cost of rental
revenue 5.0 4.8 18.0 14.5
Cost of other
revenues 6.6 5.8 27.2 23.1
Other
operating
expenses 27.0 24.8 91.7 84.1
Corporate
expense, net 10.0 6.9 34.7 27.5
Depreciation
and
amortization 9.3 6.5 30.4 22.8
Impairment
losses -- -- 14.1 --
-------------- ------------ ----------- -----------
Total
expenses 180.8 176.8 629.7 524.9
-------------- ------------ ----------- -----------
Operating
profit 45.6 50.2 130.9 110.5
Other income
(expense) (2.6) 35.4 (9.2) 120.6
-------------- ------------ ----------- -----------
Pretax income
from continuing
operations 43.0 85.6 121.7 231.1
Income tax
expense (14.5) (29.6) (42.8) (89.6)
Minority interest
(expense) income 0.1 (0.4) (0.5) (1.3)
Equity in income
(loss) of
unconsolidated
affiliates(a) 0.3 (0.3) (2.2) 11.0
Discontinued
operations -- -- -- 23.2
-------------- ------------ ----------- -----------
Net income $28.9 $55.3 $76.2 $174.4
============== ============ =========== ===========
Net income per
diluted share $0.37 $0.70 $0.98 $2.14
============== ============ =========== ===========
EBITDA(b) $58.3 $97.4 $170.0 $325.9
============== ============ =========== ===========
EBITDA per
diluted share(b) $0.75 $1.23 $2.18 $4.01
============== ============ =========== ===========
Weighted average
diluted shares
outstanding 77,783,671 79,115,809 77,825,790 81,340,615
(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 ($0.2 million loss in the fourth
quarter 2002, $11.9 million income for the year 2002) and commercial
real estate segment ($0.1 million loss in the fourth quarter 2002,
$0.9 million loss for the year 2002).
(b) See Table 17 above for a reconciliation of net income to EBITDA.
Table 21
Quarterly Revenues
By Segment(a)
(in millions)
Quarter Ended Dec. 31, Year Ended Dec. 31,
---------------------- -------------------
2003 2002 2003 2002
------------ --------- ----------- -------
Community Development $135.7 $129.8 $494.9 $386.7
Commercial real estate 41.9 51.3 129.9 120.2
St. Joe Land 40.5 36.2 99.2 84.0
Forestry 8.3 9.5 36.6 41.2
Corporate and other -- 0.2 -- 3.3
------------ --------- ----------- -------
Total revenues $226.4 $227.0 $760.6 $635.4
============ ========= =========== =======
(a) Reformatted to reflect equity in income of unconsolidated
affiliates separately from revenues. See footnote to Table 20.
Table 22
Quarterly Segment Income Before
Taxes, Minority Interest and Equity in Income
Of Unconsolidated Affiliates(a)
(in millions)
Dec 31, Sept 30, June 30, March 31,
2003 2003 2003 2003
-------- -------- -------- ---------
Community Development $13.2 $32.1 $23.0 $12.4
Commercial real estate 6.5 (1.2) (11.1) 3.3
St. Joe Land 33.2 14.8 12.8 17.6
Forestry 2.3 1.7 2.2 1.9
Corporate and other (12.2) (12.0) (10.7) (8.1)
-------- -------- -------- ---------
Income before income
taxes, minority
interest and equity
in income of
unconsolidated
affiliates $43.0 $35.4 $16.2 $27.1
======== ======== ======== =========
Dec 31, Sept 30, June 30, March 31,
2002 2002 2002 2002
-------- -------- -------- ---------
Community Development $19.9 $18.4 $17.9 $4.6
Commercial real estate 4.6 (0.9) (0.4) (0.4)
St. Joe Land 30.7 8.6 10.5 18.4
Forestry 2.0 1.7 2.3 1.9
Corporate and other 28.4 (11.1) (13.7) 87.8
-------- -------- -------- ---------
Income before income
taxes, minority
interest and equity
in income of
unconsolidated
affiliates $85.6 $16.7 $16.6 $112.3
======== ======== ======== =========
(a) Excludes equity in income of unconsolidated affiliates,
previously reported in operating revenues. See footnote to Table 20.
Conference Call Information
St. Joe will host an interactive conference call to review the
company's results for the fourth quarter and year ended December 31,
2003 and to discuss its outlook for 2004 on Tuesday, February 3, 2004,
at 10:00 AM, Standard Daylight Time.
To participate in the call, please phone 888.423.3280 (for
domestic calls from the United States) or 612.332.0530 (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 716223.
St. Joe will also webcast the conference call live over the
Internet in a listen-only format 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 St. Joe web site approximately three hours following the call.
About St. 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, commercial, industrial and
resort development, land sales and commercial real estate services.
St. Joe also has significant interests in timber.
More information about St. Joe can be found online at
http://www.joe.com.
Forward-Looking Statements
We have made forward-looking statements in this earnings release,
particularly in the Outlook for 2004 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" or similar expressions in this release. In particular,
forward-looking statements include, among others, statements about the
following:
-- the size and number of commercial buildings and residential
units;
-- the expected development timetables, development approvals and
the ability to obtain approvals;
-- 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;
-- 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 terms of 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, 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;
-- decreases 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 or regulations affecting the
development of real estate;
-- the availability of 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," "Advantis,"
"WindMark," "WaterColor," "WaterSound," "RiverCamps" and the "taking
flight" logo are registered service marks of, and "JOE", "SouthWood",
"Beckrich", "Pier Park" and "Arvida" are service marks of, The St. Joe
Company.
CONTACT: The St. Joe Company, Jacksonville
Media:
Jerry M. Ray, 904/301-4430
jray@joe.com
or
Investors:
Steve Swartz, 904/301-4347
sswartz@joe.com