Nationally, nearly half of 2006 buyers are upside down

[SWGB]

I remember seeing an original pricing sheet for the Retreat when it was still a JOE development. I can guarantee that you will never see prices like that again in the Retreat. I believe gulf front lots were going for around $400,000.

[AAbsolute]

Today the CNBC Market Bozo (aka Cramer) had this to say about JOE:

St. Joe [JOE 37.23 -0.04 (-0.11%) ]: The largest individual private landowner in Florida is heavily exposed to what Cramer said would be one of the last real estate markets to recover. For that reason, he said this stock probably won’t be worth buying for three to five years.

That statement from Cramer is like a lazer fixed on the root point of my comment. In order to post future quarterly revenue JOE must sell land. In order to sell land they must successfully compete with all the product both on the market and not yet to market. There are currently far more sellers than buyers and somehow JOE must constantly pick up revenue within that dynamic. In a price driven market JOE must undercut their own customers and every competing developer for miles around.

JOE seems to finally be worth more as a privately held firm than a public company.

[AAbsolute]

Don't blame JOE? Caveat Emptor? Is it not a lie to withhold historical fact? What answers were given when lot buyers asked "Will JOE ever become our competitor, the root of a severe devaluation of our land?

Hills at the Beach can answer that question. I can only make assumptions.

[Little Fish]

Hillsatthebeach:

Thanks for your comment. If Joe is including 2 years dues and beach club memberships along with the new build-outs, I can see why it may be difficult for existing owners to sell. That said, don't the current lot owners have the ability to purchase beach club memberships? If so, that could help their case.

Little Fish

[Miss Critter]

Hillsatthebeach:

Thanks for your comment. If Joe is including 2 years dues and beach club memberships along with the new build-outs, I can see why it may be difficult for existing owners to sell. That said, don't the current lot owners have the ability to purchase beach club memberships? If so, that could help their case.

Little Fish

Not sure sinking even more money in a declining investment is looking good to them at this point. Aren't those memberships pretty expensive?

[AAbsolute]

Hillsatthebeach:

Thanks for your comment. If Joe is including 2 years dues and beach club memberships along with the new build-outs, I can see why it may be difficult for existing owners to sell. That said, don't the current lot owners have the ability to purchase beach club memberships? If so, that could help their case.

Little Fish

JOE gave all Watersound existing lot or homeowners an opportunity to buy Beach Club memberships and has since closed the Beach Club to existing lot and homeowners. The only properties that JOE is giving the Beach Club entitlement to is their own inventory of new lots and homes.

Again, this is a part of JOE's competitive advantage over their existing customers.

[AAbsolute]

Not sure sinking even more money in a declining investment is looking good to them at this point. Aren't those memberships pretty expensive?

Full Memberships are listed at $20,000.00, however JOE is offering a special of $5,000.00 to developer owned lots or homes and other incentives. This seems to be a very good deal.

[hillsatthebeach]

Currently the only way a new buyer in WaterSound can purchase a beach club membership is to buy a property that currently has a membership tied to that property or to purchase from St. Joe in the WaterSound communities. Like I said I understand why Joe has set the club up this way but I also see how it is hurting sellers and sales in general in WaterSound and I wish there could be a more positive solution.

[AAbsolute]

Currently the only way a new buyer in WaterSound can purchase a beach club membership is to buy a property that currently has a membership tied to that property or to purchase from St. Joe in the WaterSound communities. Like I said I understand why Joe has set the club up this way but I also see how it is hurting sellers and sales in general in WaterSound and I wish there could be a more positive solution.

JOE gave us fair warning and a limited time offer to purchase Beach Club Memberships. I don't understand existing owners complaining now about wanting to join. It seems the most educated and fortunate people should live with a little more gratitude than to constantly want to change the rules.

You watch, in the future when the Watersound Beach Club becomes overcrowded to the point of not being beneficial Members will complain about that too. You've been there as much as I have. Don't you think with the 1,500 possible new members that it will be overcrowded? This season is just the 2nd season and we could not always find a spot to set up.

I really think that in time the Dunesider will be more exclusive and private than our Members only Beach Club.

[Miss Critter]

Please pardon my ignorance, but precisely what is included in Beach Club membership? Doesn't the desirability of the property decline considerably without it? And why build a beachside development with a club that can only accommodate a small portion of owners?

[scooterbug44]

Please pardon my ignorance, but precisely what is included in Beach Club membership? Doesn't the desirability of the property decline considerably without it? And why build a beachside development with a club that can only accommodate a small portion of owners?

Shhhhh! Logic and foresight has no place in discussions like this!

[Miss Kitty]

Shhhhh! Logic and foresight has no place in discussions like this!

...they have someone on the payroll that watches trends and then either raises or lowers the price. Just take a look at how they treat their Camp Creek members.

[AAbsolute]

Please pardon my ignorance, but precisely what is included in Beach Club membership? Doesn't the desirability of the property decline considerably without it? And why build a beachside development with a club that can only accommodate a small portion of owners?

Watersound Beach has abundant gulf front property that is open to anyone in Watersound Beach. The Watersound Beach Club has a very private gated entrance. Within the Beach Club property is the only tennis facility in Watersound Beach. In addition there is a very nice restaurant with a gulf front bar above. The nicest pool in the neighborhood is in the club and there are some private rooms that they hold activities in for neighborhood kids, etc.

Those are the benefits as I see them. At the same time there is always the Emperors New Clothes syndrome with these types of things. At this time JOE is adding Beach Club membership as incentive on 100's of their developer owned properties. I don't know the current membership stat's but I would bet that there are more current members than the capacity approved by the Fire Marshall for the club or the simming pool occupancy load by the Health Department. We will see in time how this develops.

[fisher]

Currently the only way a new buyer in WaterSound can purchase a beach club membership is to buy a property that currently has a membership tied to that property or to purchase from St. Joe in the WaterSound communities. Like I said I understand why Joe has set the club up this way but I also see how it is hurting sellers and sales in general in WaterSound and I wish there could be a more positive solution.

don't worry. When Joe really needs the revenue, they will open up the membership gate to all owners again. Right now, they are using the club as a gimmick to sell their own lots. It won't last forever. If you own in WS and want a membership, it's only a matter of time before you can buy one.

[fisher]

Please pardon my ignorance, but precisely what is included in Beach Club membership? Doesn't the desirability of the property decline considerably without it? And why build a beachside development with a club that can only accommodate a small portion of owners?

The beach club was necessary to entice Watersound North homeowners to buy. Gives them guaranteed beach access.

There are other pools for WS and WSWB homeowners to use if they don't belong to the "ultra exclusive" beach club. Waste of money for WS and WSWB homeowners to join IMHO.

[SHELLY]

don't worry. When Joe really needs the revenue, they will open up the membership gate to all owners again. Right now, they are using the club as a gimmick to sell their own lots. It won't last forever. If you own in WS and want a membership, it's only a matter of time before you can buy one.

When JOE unloads its inventory, they'll just turn over the keys to everything and move on--leaving it up to the HOAs to hash everything out.

.

[AAbsolute]

The beach club was necessary to entice Watersound North homeowners to buy. Gives them guaranteed beach access.

There are other pools for WS and WSWB homeowners to use if they don't belong to the "ultra exclusive" beach club. Waste of money for WS and WSWB homeowners to join IMHO.

Do you think the Beach Club is going to be Watersound North's beach access? Home many properties are planned for Watersound North? I feel pretty sure that this will exceed capacity.

[Miss Kitty]

When JOE unloads its inventory, they'll just turn over the keys to everything and move on--leaving it up to the HOAs to hash everything out.

.

ho-boy

[AAbsolute]

ho-boy

JOE's ad for Watersound North shows over 1,000 homes. There's no way they can serve that many people plus the existing members in the same club.

I should say that the Watersound Beach Club is privately owned and not a part of any HOA.

[SWGB]

When JOE unloads its inventory, they'll just turn over the keys to everything and move on--leaving it up to the HOAs to hash everything out.

.

Yep that is there secret plan. In the state of Florida a developer must turn control of a development over to the HOA at the 5 year mark. It's not dumping it's following the law.

[fisher]

Yep that is there secret plan. In the state of Florida a developer must turn control of a development over to the HOA at the 5 year mark. It's not dumping it's following the law.

Are you certain about that? If that's the law, then the WS and WC HOA's should be turned over by now. Has that occurred?

[Miss Kitty]

Are you certain about that? If that's the law, then the WS and WC HOA's should be turned over by now. Has that occurred?

I was under the impression that St. Joey had to sell a certain % of lots/homes before it was turned over.

[AAbsolute]

Yep that is there secret plan. In the state of Florida a developer must turn control of a development over to the HOA at the 5 year mark. It's not dumping it's following the law.

What's the Statute number on that law you are telling us about?

[fisher]

I was under the impression that St. Joey had to sell a certain % of lots/homes before it was turned over.

Yes, I thought that's the way it works in most developments with HOA's.

[AAbsolute]

Do you think those 50% who are upside down are going to slowly get right or are developers who need to move property going to continue to keep the boom time buyers stuck?

[SHELLY]

I was under the impression that St. Joey had to sell a certain % of lots/homes before it was turned over.

That's my understanding too. It's why you see developers unloading 20-30 condoze at auctions--they're looking to get out from under subsidizing landscaping, pool servicing and maintenance.


.

[AAbsolute]

That's my understanding too. It's why you see developers unloading 20-30 condoze at auctions--they're looking to get out from under subsidizing landscaping, pool servicing and maintenance.


.

That's a good, logical idea.

[Miss Critter]

That's my understanding too. It's why you see developers unloading 20-30 condoze at auctions--they're looking to get out from under subsidizing landscaping, pool servicing and maintenance.


.

Excellent point. Financing issues aside, it certainly explains why they would sell so many at a loss.

[SWGB]

Florida statute 718.301 covers the transfer of association control for condominiums.

I was wrong, if it's less that 50% sold then it's 7 years.

Florida chapter 718 does not cover homeowner's associations, chapter 720 does and does not cover HOA's.

In addition WC and WS are mixed developments. All of the condominiums (attached units with common elements) fall under the COA act and then the homes portion falls under the HOA act. To further complicate this each Phase is it's own umbrella association over that phase. Ultimately there is a master association and that follows the COA due to COA's within the structure.

Hope that helps.

[AAbsolute]

Yesterday JOE increased their quarterly revenues by $512,000.00 they sold another developer owned lot in Watersound Beach. Maybe it'll be an iproved quarter.

The family who bought the lot next door from JOE for $971,000.00 3 years ago probably isn't quite as happy, but caveat empor. No?

[SHELLY]

Yesterday JOE increased their quarterly revenues by $512,000.00 they sold another developer owned lot in Watersound Beach. Maybe it'll be an iproved quarter.

...JOE CEO's base salary is $514,134--so that revenue isn't going to make it to the bottom line.


.

[AAbsolute]

...JOE CEO's base salary is $514,134--so that revenue isn't going to make it to the bottom line.


.

At least he is pulling his weight.

[SHELLY]

At least he is pulling his weight.

...he's got another $500k in "other compensation" to cover...then there's the electricity and post-it note costs.

.

[AAbsolute]

...he's got another $500k in "other compensation" to cover...then there's the electricity and post-it note costs.

.

With that sale plus the 2 lots at 315,000 last week that should cover his whole pay, no?

[SHELLY]

With that sale plus the 2 lots at 315,000 last week that should cover his whole pay, no?

...then there's Rummell's payment of his regular salary thru last month (he left in May 08); annual payment of $250K + "other expenses" for services as COB through 2009; cash in lieu of stock grants as a "non-employee" director; and target bonus of 100% of his salary for 2008 and prorated payment of any additional bonuses the committee may authorize for 2008.

Next up--the CFO's salary. So get out there and sell, sell, sell those lots...baby needs a new pair of shoes!

.

[AAbsolute]

...then there's Rummell's payment of his regular salary thru last month (he left in May 08); annual payment of $250K + "other expenses" for services as COB through 2009; cash in lieu of stock grants as a "non-employee" director; and target bonus of 100% of his salary for 2008 and prorated payment of any additional bonuses the committee may authorize for 2008.

Next up--the CFO's salary. So get out there and sell, sell, sell those lots...baby needs a new pair of shoes!

.

JOE has got quite a bit of land in their arsenal and it's apparent they are not afraid to scorch the earth. I remember the Watercolor initial town design charette like yesterday. That night at the Seaside Rep. Theatre when all those JOE exec's were doing the meet and greet was real interesting. Who would have imagined that 10 years later it would be like this?

[SHELLY]

JOE has got quite a bit of land in their arsenal and it's apparent they are not afraid to scorch the earth. I remember the Watercolor initial town design charette like yesterday. That night at the Seaside Rep. Theatre when all those JOE exec's were doing the meet and greet was real interesting. Who would have imagined that 10 years later it would be like this?

...ah....

.

[SWGB]

SHELLY, aren't you forgetting that JOE's revenue isn't purely real estate sales. Unfortunately when Starbucks leaves they'll loose that rental revenue, but they still have plenty of other rental property.

That and there was the announcement of a joint effort to add more retail space by Pier Park. 58 acres if IIRC.

[AAbsolute]

SHELLY, aren't you forgetting that JOE's revenue isn't purely real estate sales. Unfortunately when Starbucks leaves they'll loose that rental revenue, but they still have plenty of other rental property.

That and there was the announcement of a joint effort to add more retail space by Pier Park. 58 acres if IIRC.

I think I read that JOE sold the Watercolor Crossings/Publix shopping center last summer. Does JOE keep other income producing rental properties or do they own amenity based properties that they may or may not turn a profit on? It does seem that if anyone could make it work JOE could do very well with commercial and other rental.

[SHELLY]

SHELLY, aren't you forgetting that JOE's revenue isn't purely real estate sales. Unfortunately when Starbucks leaves they'll loose that rental revenue, but they still have plenty of other rental property.

I'm pretty sure JOE sold off all its commercial RE. Their financials for 2008 are showing zip for Commercial Rental Revenue vs. @ $600K the year previous. (Or maybe their tenants just stopped paying the rent this year )

[/B]That and there was the announcement of a joint effort to add more retail space by Pier Park. 58 acres if IIRC[/B].

From their Aug 8K:

After the close of the second quarter, JOE and Glimcher Realty Trust entered into a strategic partnership to develop an anchored retail shopping center across from Pier Park along Highway 98 in Panama City Beach. JOE and Glimcher will jointly develop 58 acres that will be marketed to large national retail outlets.

The agreement is subject to minimum leasing requirements, financing and other customary conditions.

.......I recommend you don't hold your breath waiting for this one to start cranking out a profit.

.

[TheSheep]

That statement from Cramer is like a lazer fixed on the root point of my comment. In order to post future quarterly revenue JOE must sell land. In order to sell land they must successfully compete with all the product both on the market and not yet to market. There are currently far more sellers than buyers and somehow JOE must constantly pick up revenue within that dynamic. In a price driven market JOE must undercut their own customers and every competing developer for miles around.

JOE seems to finally be worth more as a privately held firm than a public company.

Indeed. One of the greatest assests and liabilities to the American biz scene, the corporation. Limited liabilities and limited (quarterly) views.