JACKSONVILLE, Fla. ? The St. Joe Company announced today that it intends to significantly accelerate its value creation process in Northwest Florida and is restructuring the company to accomplish that objective.
The restructured JOE is designed to increase its financial flexibility and strengthen its balance sheet. To improve its financial performance the company intends to:
? Significantly reduce capital expenditures;
? Meaningfully decrease selling, general and administrative expenses;
? Divest non-core assets;
? Aggressively lower company debt; and
? Eliminate the current dividend and over time return value to shareholders through JOE?s share repurchase program.
?Going forward, a restructured JOE will enable us to accelerate the transition of our land to higher and better uses,? JOE?s Chairman and CEO Peter S. Rummell said. ?At the same time, we will limit our capital investments by shifting more development to a range of best-of-class strategic business partners that include branded builders, project developers, venture partners, alliances and key long-term customers. Capital investment for horizontal developments will be limited to our most strategic and valuable places. We believe this approach will accelerate our land sales and development.?
?We are repositioning JOE from an ?end-to-end? developer to Northwest Florida?s primary supplier of entitled land and development partner,? Rummell said. ?By better managing our fixed overhead costs, we will be able to preserve the low basis in our land, which is fundamental to our ability to use price as a competitive advantage, to put time back on our side and to create significant value over the long term.?
?We are dramatically changing the company to become more efficient,? said Rummell. ?Through our restructuring process, we will significantly reduce capital expenditure requirements and operate with a leaner infrastructure. We believe JOE will benefit from a stronger balance sheet and, over time, a meaningful increase in our financial flexibility.?
JOE TO DIVEST NON-CORE ASSETS
JOE intends to harvest value from its land assets that are no longer strategic, that have already been moved to their highest and best uses, or whose full potential value is beyond the time-value curve. JOE intends to divest, over a reasonable time period given current market conditions, assets that include:
? Sunshine State Cypress Mill
? Selected non-contiguous parcels with commercial entitlements
? Approximately 100,000 acres of long-term rural lands
Also priced to sell are approximately 1,200 developed home sites and approximately 190 homes.
REDUCE AND TIGHTLY FOCUS CAPITAL EXPENDITURES
The restructuring plan calls for a major reduction in capital expenditures and tighter focus on our high-growth assets. Currently located primarily in Walton, Bay and Gulf Counties, these high-growth assets are the primary targets for future new business, partners and ventures. Examples of these growth assets include:
? The 75,000-acre WestBay Sector to be anchored by the relocated Panama City ? Bay County International Airport. After nearly 10 years of study, analysis and permitting, the local airport authority is nearing the start of construction of the airport.
? JOE?s resorts at WaterSound and WindMark Beach which define the Northwest Florida experience.
? In Walton and Gulf counties, JOE resorts are existing keys to future value creation. The Town of WaterSound is designed to drive value inland, across U.S. Highway 98 all the way to the Intracoastal Waterway. The thousands of acres within this development zone are capable of supporting dozens of land uses.
? A hundred miles to the east of WaterSound, JOE is seeking additional strategic partners who share our vision to accelerate growth at WindMark Beach and for Port St. Joe?s planned waterfront town center.
? Multiple entitled commercial parcels for mixed-use, retail, office and industrial uses.
A NEW JOE ORGANIZATIONAL STRUCTURE
To accomplish these objectives will require a realigned JOE. To that end, the company is:
? Creating a streamlined corporate and regional staff to support our new structure, instead of an organization designed to support full-scale development.
? Partnering with nationally recognized leisure, hospitality and lifestyle brands to operate our hospitality, recreational and golf assets.
? Seeking relationships with strategic partners to leverage existing investment and expertise.
The new JOE will consist of a lean corporate center focused on regional planning, land-use entitlements, and business-to-business relationships with strategic partners and customers. JOE will increase its efforts to stimulate regional economic development and to identify and manage key regional inducers.
Before the end of the year, JOE intends to transfer the day-to-day operations of its hospitality, recreational and golf assets to recognized leisure, hospitality and lifestyle companies. For many of the approximately 500 employees in these units, this change will provide significant new professional opportunities. JOE will continue to own the assets to keep the revenue stream and ensure they continue to be managed in a way that increases the value of the surrounding JOE land.
Approximately 260 additional positions company-wide, particularly in project development and related support staff, will be either eliminated or transferred to strategic partners and customers between now and the end of 2008.
In connection with this restructuring, JOE expects to take a charge to earnings of approximately $7 million consisting of severance benefits to employees. This charge will be expensed substantially in 2007 and 2008. JOE?s restructuring is expected to generate annual savings of approximately $10 million in 2008, approximately $18 million in 2009 and approximately $20 million in later years.
In addition, JOE expects to take charges aggregating approximately $25 to $30 million in the third quarter of 2007 related to contract termination costs, the write-off of capitalized costs at certain projects, the impairment of completed spec homes in several communities and the write-off of goodwill related to Sunshine State Cypress Mill.
The charges outlined in this release are not expected to cause a violation of any debt covenants in 2007. The company is currently negotiating modifications to the bank credit facility with our bank group in order to mitigate the potential for any covenant breach in 2008. JOE also intends to seek similar covenant modifications from its Senior Note holders.
Replies
47
Beach Fanatic
Our hearts go out to anyone whose job locally may be impacted by this announcement of Joe's restructuring. Some great folks work there, and may they all continue to be positive and shine through the changes outlined by Joe today.
SoWal Expert
St. Joe is restructuring and eliminating jobs in order to increase efficiency and gain $$. Must be a day that ends in "Y" ;-).
Beach Fanatic
what gobbleygook language...can someone translate it into readable English...Shelly?
I'm too tired to wade through all those words to figure out what they are trying to say....:roll:
I'm too tired to wade through all those words to figure out what they are trying to say....:roll:
Beach Lover
note that the "high-growth" assets Joe intends on holding onto are located in Walton & bay counties
Beach Fanatic
pretty simple really...the market is bad and will be getting worse for some time to come...some poor folk have already kissed their assets goodbye...a phenom witnessed daily by auctions,foreclosures,short sales,continually dropping list prices and those nasty "i sold mine for less than i paid sales"......yet there is a glimmer of hope as the county government is growing ever larger and by the way pays way better than St. Joe...i personally hope Joe does what it takes to keep their values high...cuz guess what happens to the rest of us if they don't...
SoWal Insider
what gobbleygook language...can someone translate it into readable English...Shelly?
I'm too tired to wade through all those words to figure out what they are trying to say....:roll:
MY TAKE?
(1) Florida Real Estate as an investment is over
(2) JOE is a provider of Florida Real Estate
(3) JOE is bleeding cash
(4) JOE needs to continue the care and feeding of its executives
(5) JOE must find cash
(6) JOE is going to eliminate 75% of its workforce
(7) JOE is going to stop paying its shareholders dividends (OUCH!)
(8) JOE is going to unload its spec homes and lots
(9) JOE is going to source out management of its hotels and golf courses
(10) JOE is going to carve off and sell 100,000 acres (if it can)
(11) JOE is cutting WAY BACK on capital expenditures (buh-bye amenities)
(12) JOE has no clear cut plan for the future---other than to try to get cash anyway possible (essentially like a hooker on the docks saying "Hello Sailor")
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Meow
Should be an interesting HOA weekend. 
I hope I am not on the chopping block. :shock:
I hope I am not on the chopping block. :shock:
Beach Fanatic
This is interesting - Joe is going to dump 190 homes and 1,200 lots, the article doesn't say exactly where. It also doesn't break down how much of the 20-30 million writeoff is for these properties.
I wonder what exactly "dump" will mean - these properties (WC and WS) have actually been selling better than the general market on 30A (but apparently not well enough for Joe).
It will be interesting to see how low they go - since the rest of the Walton County market will surely follow.
I wonder what exactly "dump" will mean - these properties (WC and WS) have actually been selling better than the general market on 30A (but apparently not well enough for Joe).
It will be interesting to see how low they go - since the rest of the Walton County market will surely follow.
Beach Fanatic
This is interesting - Joe is going to dump 190 homes and 1,200 lots, the article doesn't say exactly where. It also doesn't break down how much of the 20-30 million writeoff is for these properties.
I wonder what exactly "dump" will mean - these properties (WC and WS) have actually been selling better than the general market on 30A (but apparently not well enough for Joe).
It will be interesting to see how low they go - since the rest of the Walton County market will surely follow.
Looking at recent prices for JOE homes sold in Watersound, they have been lowering prices considerably. They have also been lowering the prices on homes in Watercolor below prices paid for similar homes just a year or so ago.
Beach Comber
I am curious to know if anyone is aware of how many spec homes and lots St. Joe still owns in WaterColor. I believe St. Joe already sold all of their lots and spec houses in Phases 1, 2 and 3 and only has lots and spec houses in Phase 4 behind the Publix. The prices on these homes already is pretty low (relatively speaking), as they are priced in the $600,000 range. My guess is the price on these may be dropped to the $500,000 range.
Does anyone know if St. Joe still has signifanct lots or spec homes in their inventory in Phases 1, 2 or 3 of WaterColor?
Does anyone know if St. Joe still has signifanct lots or spec homes in their inventory in Phases 1, 2 or 3 of WaterColor?
Christini Zambini
This is interesting - Joe is going to dump 190 homes and 1,200 lots, the article doesn't say exactly where. It also doesn't break down how much of the 20-30 million writeoff is for these properties.
I wonder what exactly "dump" will mean - these properties (WC and WS) have actually been selling better than the general market on 30A (but apparently not well enough for Joe).
It will be interesting to see how low they go - since the rest of the Walton County market will surely follow.
I think the term "dump" is relative. Most likely they will sell the lots to national builders, such as David Weekly Homes, like they did in Palmetto Trace in PCB. I doubt that many (or any) of these lots will reach the MLS. Keep in mind that Watersound (North) has, I believe, approximately 1,200 potential lots. They will not dump Watercolor or Watersound Beach as these are the only development currently making money. St. Joe also has developments in Port St. Joe that are not doing too well.
SoWal Expert
Word on the street is that Peter Rummell is also stepping down (retiring). I haven't read through the other threads on JOE, and this may have been mentioned earlier. Does anyone know who JOE will be using to replace Peter?
SoWal Expert
I think "dump" is on the money. St. Joe made a lot of folks unhappy when the market first started to slow and they decided to unload their Joe built homes for prices less than empty lots. I predict they will go as low as they need to in order to unload the above mentioned homes & properties, regardless of any effect it may have. St. Joe is only looking out for St. Joe's current balance sheet, not planning for the future, no matter what the press releases and spin doctors may say.
SoWal Insider
JOE wants completely out of the subdivision business and is selling off any and all properties that it still has on the books in any of its "places" across the state of Florida...so it no longer needs to keep up the sales office crews, appearance and amenities (read: reduce expenses and capital spending).
In the conference call, Rummell said they will announce which companies are going to take over management of Watercolor and the various golf courses in the next couple of days. He said they were going to keep ownership of the properties, but I suspect if someone comes along and wants to buy them he'll jump on it in a New York second.
JOE is essentially just a "Florida Land Pimp." Whether that is enough to justify the outrageous compensation packages it gives to its executives remains to be seen.
In the conference call, Rummell said they will announce which companies are going to take over management of Watercolor and the various golf courses in the next couple of days. He said they were going to keep ownership of the properties, but I suspect if someone comes along and wants to buy them he'll jump on it in a New York second.
JOE is essentially just a "Florida Land Pimp." Whether that is enough to justify the outrageous compensation packages it gives to its executives remains to be seen.
Edited
Meow
...I know, but I am not telling. I learned everything I know from Joe. 
Beach Fanatic
should we have equal anomosity towards comissioners and "planners" in SoWal? after all they have approved every "developers" infill neighborhood, every higher density project, every lot split request, to the tune of 10's of thousands of new homes waiting to be on the market even after a 2 year bust in the market...where we stand now with what has already been approved i think we may be looking at a 30 year build out based on "demand"...so i don't think we need to condemn joe for allowing extensions to build out on any lot owner...or for having to sell some lots cheaper than they did in 04/05...
Edited
Beach Comber
Camp Creek,
Neither David Weekly nor other national production builders are in a position to expand their already large inventory of unsold product, be it homes or lots.
Dumping real estate and selling land is all well and good, but until Joe finds a way to sustain earnings by diversifying it will continue its roller coaster ride. Sorry to see so many of the development guys and gals let go at the PCB office.
Neither David Weekly nor other national production builders are in a position to expand their already large inventory of unsold product, be it homes or lots.
Dumping real estate and selling land is all well and good, but until Joe finds a way to sustain earnings by diversifying it will continue its roller coaster ride. Sorry to see so many of the development guys and gals let go at the PCB office.
SoWal Expert
should we have equal anomosity towards comissioners and "planners" in SoWal? after all they have approved every "developers" infill neighborhood, every higher density project, every lot split request, to the tune of 10's of thousands of new homes waiting to be on the market even after a 2 year bust in the market...where we stand now with what has already been approved i think we may be looking at a 30 year build out based on "demand"...so i don't think we need to condemn joe for allowing extensions to build out on any lot owner...or for having to sell some lots cheaper than they did in 04/05...
I don't think it's fair to blame the commissioners & planners for the number of homes on the market - that's supply & demand. Them approving or not approving lot splits doesn't have a major effect when there are thousands of vacant & buildable lots in the area. I DO blame them for allowing too high of density projects and not standing up to developers and their $$$ (constantly, read any "private" beach or development thread).
St. Joe is being criticized for changing its own rules, constantly trying to make a quick buck any way it can, and screwing over its communities, employees, and neighbors.
Beach Fanatic
The cold reality is that JOE is a public company, and as so, their primary concern is for stockholder value. There is nothing Wall Street likes better than the words "layoff" and "streamlining". The press release was written to please the Street -- I suspect the reality inside the company is a whole lot worse then what's written here.
Edited
Beach Fanatic
I think the term "dump" is relative. Most likely they will sell the lots to national builders, such as David Weekly Homes, like they did in Palmetto Trace in PCB. I doubt that many (or any) of these lots will reach the MLS. Keep in mind that Watersound (North) has, I believe, approximately 1,200 potential lots. They will not dump Watercolor or Watersound Beach as these are the only development currently making money. St. Joe also has developments in Port St. Joe that are not doing too well.
I agree. Even though JOE is lowering prices considerably on its remaining lots and houses in WS and WC, I don't beleive they will sell any of this remaining inventory off to National Builders. The basis in these lots is very low so they are still realizing nice profits off the sales even at lower price levels.
Interestingly, they have actually been selling some lots in WS and WC at prices that are higher than private listings by individuals right next door (go figure???
)Beach Fanatic
I am curious to know if anyone is aware of how many spec homes and lots St. Joe still owns in WaterColor. I believe St. Joe already sold all of their lots and spec houses in Phases 1, 2 and 3 and only has lots and spec houses in Phase 4 behind the Publix. The prices on these homes already is pretty low (relatively speaking), as they are priced in the $600,000 range. My guess is the price on these may be dropped to the $500,000 range.
Does anyone know if St. Joe still has signifanct lots or spec homes in their inventory in Phases 1, 2 or 3 of WaterColor?
There are several spec homes in Watercolor Phase I, II and III and about 10 in Phase IV. There are a handful of spec homes in WS and WS West. There are under 10 lots in Phase I, II and III of Watercolor but a bunch in Phase IV. They have about 15 or 20 lots left in WS but over 150 in WS West.
They have been aggressively lowering prices on many of these properties and taking less than asking price which is a new deal for them.
Does anyone know if the JOE real estate sales offices will be effected by the cuts???
Beach Fanatic
(6) JOE is going to eliminate 75% of its workforceOur old gang in PSJ has recently been reduced by several--a couple by choice, but certainly not all.
"A leaner, more responsive JOE" indeed.
SoWal Expert
I think them not managing Watercolor & Watersound is pretty typical - once they reach a certain percentage of buildouts they have to transfer to a management company or HOA.
The rest - rats leaving a sinking ship IMO.
The rest - rats leaving a sinking ship IMO.
SoWal Insider
Best "Laff O' the Day" on the Housing Bubble message boards:
"They're going to have to bury a hell of alot of St JOE statues to move 100,000 acres of Florida swamp." :funn:
.
"They're going to have to bury a hell of alot of St JOE statues to move 100,000 acres of Florida swamp." :funn:
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Edited
needs to get out more
St. Joe Towns and Resorts??
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