Becalmed Manatee condo project hits St. Joe
Stung by the state's real estate crisis, Florida land giant and coastal developer St. Joe Co. swung to a fourth-quarter loss as the Jacksonville-based company reported a $27.9 million loss in the fourth quarter of 2008 (versus $1 million earned in the same period of 2007) and a $35.9 million loss for all of '08 compared with earnings of $39.2 million in 2007.
While St. Joe's real estate development has been focused heavily in the Florida Panhandle, it was a coastal Manatee County project that stung the company. In an earnings release Tuesday, St. Joe said the biggest hit was a $28.3 million write-down related to its SevenShores condominium development project (shown in rendering).
St. Joe had shown little signs of continuing presales of its Sevenshores condos that were to be built over a 10-year period, and last month a sales office stationed at the planned development site was removed, according to the Bradenton Herald. The condos were apparently a legacy project of residential developer Arvida, which St. Joe purchased in the late 1990s.
St. Joe CFO Bill McCalmont explained the heavy writedown Tuesday in comments to analysts:
"As has been reported frequently, there is virtually no demand for condominium projects in this market at this time. It is also important to note that we have not commenced vertical construction.
"This condominium development project was written-down to approximate the current fair market value of land entitled for 278 condominium units. This write-down was necessary, because we elected not to invest additional capital or acquire additional land for the project under an existing option agreement.
"We had previously incurred certain costs for the project with the expectation that the project would include 686 units. Given the reduced potential scope of the projects, we do not believe that those costs are now recoverable.
St. Joe's primary focus has been on the beachfront properties owned along the Florida Panhandle and marketed under the high-end, coastal-county mantra of "new urbanism" epitomized by the town of Seaside west of Panama City. In fact, one of St. Joe's proudest projects, called WaterColor, is adjacent to Seaside.
Revenues in the fourth quarter slumped 50 percent to $46.7 million as real estate sales dropped 59 percent. As of Dec. 31, the company owned about 586,000 acres, mostly in northwest Florida. St. Joe aggressively restructured to deal with the real estate slowdown by shutting its home-building operations, slashing its work force to 200 from 1,500 and outsourcing management of its hotels, golf courses and marinas.
St. Joe CEO Britton Greene (in photo), according to a transcript of Tuesday's conference call, said the company stepped up efforts to sell off more of its home inventory by reducing prices at several larger communities. Said Greene:
"As we look forward, let's remember that Florida is still one of the strongest brands in the world. While it remains a place where people want to visit, live and own real estate, Florida will need to aggressively compete for economic development and job creation to maintain the promise of the brand."
For now, St. Joe is pinning its economic hopes on the creation of the new Panama City-Bay County International Airport, which is under construction. St. Joe donated some 4,000 acres to the project and expects the airport to create thousands of jobs and increase the value of its remaining land nearby following its expected opening in 2010. The larger airport will allow jets and larger planes to reach the western Panhandle, thus making that portion of the state more easily accessible to more people in other states. Still, airline cutbacks in capacity as consumers become more reluctant to travel as they try to save money amid the recession could hurt St. Joe's plans for the airport.
Greene said St. Joe is targeting four economic clusters for the Panhandle: healthcare, international trade transportation and logistics, alternative energy and environment driven by renewable energy and environmental mandates, and defense and aerospace, which is already prominent in the area.
Said Greene: "By combining the new airport with an underutilized deepwater seaport and rail system, Northwest Florida (St. Joe's own phrase for the Florida Panhandle) can connect with the global network and create a unique competitive advantage for businesses locating there."
Blessed with little debt, St. Joe has remained insulated from some of the current hardships of the economy. Company shares closed Tuesday at $21.36. Its 52-week high was $46.82.
-- Robert Trigaux, Times Business Columnist