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Florida Property Opportunities & St.Joe (JOE)

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FLORIDA - Is it still the LAND OF OPPORTUNITY ?

== The Best way to speculate on Florida Property? : Is it St.Joe Company (JOE) ? ==

JOE / The St. Joe Company ... All-data : 5-yrs : 2-yrs : 6mos / 10-d : $19.25 at 10/6/17 at (vs $17.10 at 3/6/2017)

vdOUdNN.gif

 

St Joe together with its subsidiaries, operates as a real estate development company in Florida.

The company operates in four segments: Residential Real Estate, Commercial Real Estate, Rural Land Sales, and Forestry. The Residential Real Estate segment develops mixed-use resort, and seasonal and primary residential communities. It also focuses on selling undeveloped land to third-party developers or investors. This segment serves individual purchasers, as well as national, regional, and local homebuilders. The Commercial Real Estate segment develops and sells real estate primarily for commercial and light industrial uses. The Rural Land Sales segment markets parcels for rural recreational, conservation, and timberland uses. The Forestry segment grows, harvests, and sells timber and wood fiber; and provides land management services for conservation properties.

As of December 31, 2009, the company owned approximately 577,000 acres of land concentrated primarily in northwest Florida, as well as approximately 405,000 acres in the coast of the Gulf of Mexico. It has a strategic alliance with Southwest Airlines Co. to facilitate the commencement of low-fare air service to the northwest Florida's new international airport. The St. Joe Company was founded in 1936 and is based in Jacksonville, Florida.

Back in Feb.2007, I was seeing comments like this one: NOW is the time to buy!*"

"Real estate booming in Miami and Florida is over, but the opportunity to make money in real estate is not over.
The current market is oriented to buyers’ advantage with financial incentives never seen before and sellers more willing to negotiate home prices.

Reaction:

THE ARRIVAL of a Buyer's Market, does not mean it is the time to buy,
unless it is your objective to generate commissions for the Realtor.

WE NEED to wait for:

+ A substantial fall in prices (at least 20-30% from the highs- probably more),
+ A much bigger drop in the dollar, making property cheaper relative Pounds, Euros, or Gold,
+ The slowing of newly built properties flooding into the market,
+ Some substantial absorbtion of the excess supply

These factors should take at minimum 2-3 years, and so I do not see a good buying window
until 2009-2010, at the earliest. (That's for the physical property market.)

Here's a great bellwether for Florida property - the largest landowner in the state (?):

St.Joe (JOE) ... update-2006-8 : weekly : daily
bigqy1.gif
Daily chart - a nice downwards channel in place
aa0vn7.gif

Notice how JOE bottomed right ON the 200mo.MA !

IMHO, we havent seen the Low yet. But it is not too early to start monitoring the market, and to see where
are the good sources of information. And some of the property stocks may bottom months, or even a
year before the physical property market.

On this thread, I will be collecting articles and links which relate to opportunities in Florida & to St.Joe.

- -
*Note: the above comment was from the Home page of the website, but if you dig deeper, you will find this:
"The correct selling price of a home is the highest price that the market will bear. To assist you in determining the correct asking price we provide you with a comprehensive market analysis of comparable properties sold and offered for sale in your neighborhood."
(This comment makes it absolutely clear, that the website is not designed to find opportunties in favor of the buyers - thanks for the lightly vailed honesty!)
=====
LINKS:
Florida Home Investor : http://www.flahomeinvestor.com/
St.Joe charts thread... : http://www.advfn.com/cmn/fbb/thread.php3?id=16069173
St.Joe website .......... : http://ir.joe.com/index.cfm

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IT STILL LOOKS GRIM

 

So what are rents saying about home values today? To answer that question, Fortune worked with Moody's Economy.com to estimate adjustments needed to get prices and rents back in balance. We'll go into detail below, but the headline is gloomy: According to our calculations, prices in most markets will fall by double digits over the next five years.

 

Here's how we reached that disturbing conclusion. We started with the median price of existing homes in 54 metropolitan areas, using numbers from the National Association of Realtors. We then compared those prices with the annual rent on similar properties - houses, condos, and apartments with the same number of square feet as the median-priced house in each market - using figures prepared by Property & Portfolio Research, a commercial real estate research firm. That gave us a price/rent ratio for each area. Economy.com then compared the current P/R ratio with its average over the past 15 years and calculated how much it would have to decline to return to its historical norm. The average drop for all the markets we surveyed is 28%.

 

But that's not the whole story. The adjustment doesn't come exclusively from a fall in prices - rising rents also help close the gap. To complete the picture, Economy.com assembled a forecast of rental growth in each market; the average rise in our 54 markets is a total of 12% over the next five years. So to reach the average correction of 28%, prices need to drop only about 16%.

 

Of course, that's still a big bite. And in many areas the outlook is far worse. In the major Florida cities, Orlando, Miami, and Tampa, prices need to fall 28% to 34%. It's a similar story in inland California markets such as Sacramento (-26%) and the East Bay (-31%). In East Bay boom towns like Walnut Creek, a four-bedroom house that might have fetched $1.56 million in the spring may go for less than $1.1 million in five years.

 

In a handful of cities, our formula suggests that prices will actually rise. Home values should increase slightly in Dallas, Indianapolis, Cleveland, and a few other locales the bubble missed. In Detroit houses are so cheap - the median is around $100,000 - that even a shift in the economy from disastrous to mediocre is all that's needed to lift both rents and prices.

 

 

// table :

You can see the results for 54 areas around the country in this table

 

-see: money.cnn.com/2007/11/06/real_estat...rtune/index.htm

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(I am changing the name of the thread, and pinning it)

 

St.Joe (JOE) : Best way to speculate on Florida Property?

 

St. Joe (JOE) a huge property owner in Florida,

+ Has fallen dramatically in price: from $80, to under $30,

+ Owns property at historical prices, well below current market

 

JOE ... update : Weekly : Daily : Updating charts

aa0ts8.gif

 

= =

(Here's what was said about St.Joe back in 2003, before it ran up to $80):

 

Shares of St. Joe (NYSE: JOE) are currently selling for about $32. In Dan's latest Extreme Value newsletter, he calls the stock a "buy" up to $59. So that tells me he considers St. Joe to STILL be an "extreme value" even if it nearly doubles from here. Conservative Dan will even tell you that he expects to quadruple his money in the next few years with this investment. So what's the story?

 

Developing 15,911 Acres of Pure Profits

 

"St. Joe owns a significant portion of the remaining developable coastal land in the state of Florida," Dan tells us. It owns 428,000 acres of land within 10 miles of the Gulf Coast in Florida's panhandle, including 39 miles of coastline. In addition, St. Joe has 261 miles of waterway frontage near the coast and an additional 249 miles of waterway frontage accessible by recreational boats. With nearly a million total acres, St. Joe owns about 3% of the state.

 

Today St. Joe's main business, as Dan says, is "milking the value out of its vast land holdings in northwest Florida." And business is good. Dan says, "All along the Florida panhandle, from Pensacola to Panama City, waterfront homes are appreciating at 10 to 20% a year."

 

Dan then continues:

 

St. Joe has developed or is currently building about 19 developments on a total of 15,911 acres... Beachfront homes and condos at St. Joe's WaterColor development sell for between $500,000 and $1.4 million. Empty lots at WaterColor are worth around $61 per square foot. That's just under $2.7 million per acre... Empty lots at St. Joe's WindMark Beach already sell for more than $1 million an acre.

 

Buying this Stock Is Like Paying 10 Cents on the Dollar!

 

Dan does some fancy math, settling on a conservative guess for the value of all of St. Joe's land at just over $20,000 an acre - which means St. Joe is worth about $20 billion (actually Dan believes it's worth more than that). Yet the stock is only valued at closer to $2 billion. If Dan is even close, buying St. Joe now is the equivalent of buying into the largest chunk of available waterfront land in Florida at nearly 10 cents on the dollar. I don't know how you can beat that.

 

In addition to St. Joe, Dan identified similar property opportunities at similar discounts - the largest private landowner in California... in Hawaii... and more.

 

If you are interested in diversifying some of your investment dollars into property and property development, but you don't want to have to take out a big loan or go deep into debt, and you want to get in at an extraordinary price, you may want to consider the land stocks that Dan recommends... stocks like St. Joe.

 

= = = = =

LINKS:

Corporate website : http://www.joe.com/web/corporate/investorrelations/

Yahoo profile, JOE : http://finance.yahoo.com/q/pr?s=JOE

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BIG FLORIDA HOUSES - who will buy them...?

 

*** “Florida doesn’t tax income,” explained a friend yesterday. “But they hit you hard on property taxes. I pay close to 2% of market value. And market values have gone way, way up. So, even though I don’t have a mortgage, I end up paying the equivalent of a mortgage on a reasonably-priced house. See what I mean? My house has doubled in price in the last five years...actually much more than that, but let’s keep it simple. So if I pay 2% on the value of my house today, it’s the same as 4% on what the house is really worth. I’m protected a bit because I’ve owned this for a long time...and it takes them a while to catch up to the market. But imagine some fellow who bought recently. He paid top dollar...and he’s got the property taxes to pay too. And, of course, that’s just the beginning. If I want to ensure against hurricane damage...that’s thousands more. And then there’s regular maintenance, utilities...etc. etc. Home ownership is a big pain in the neck.”

 

“I’ll tell you what’s going to happen. People are going to turn away from big, expensive houses. I feel it happening. It’s part of a change in sentiment. The baby boomers who’ve been buying these things are running out of money and credit. They’re going to be forced to cut back. And I remember you wrote once something that stuck in my mind – ‘people come to think what they have to think when they have to think it’ – or something like that. That’s what I expect. People without money are going to come to think that not having money is cool. They’re going to downsize. And they’re going to think that people who drive big, expensive cars...or live in big, expensive houses are uncool. Already, when I drive around in my 12-cylinder BMW I feel my neighbors laughing at me. It was cool a couple of years ago to have a car like that. Now, it’s uncool. Everybody thinks you’re out-of-style; it’s as if you had a mullet...or a polyester leisure suit, but those are probably coming back in style. And they think you’re destroying the environment too.”

 

/more: http://www.howestreet.com/articles/index.php?article_id=5348

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Friday, December 21, 2007

Palm Beach Post - "Market won't bottom out until '09, analyst predicts" (12-21-07)

 

"The housing market won't 'hit bottom' until 2009 - a year later than previously predicted, the chief economist for the National Association of Home Builders said Thursday."

 

/: http://thenorrisgroup.blogspot.com/

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(originally posted on GHPC and relevant here too perhaps):

 

QUOTE (Rudi @ Dec 28 2007, 01:21 AM)

Although I agree that the builders may be a leading indicator for direction,

I don't agree that they will move together in the way you are suggesting with that chart.

UNQUOTE

- -

 

(DrBubb):

 

???

The chart shows the history of how they HAVE moved together in the past.

 

housebuildersyt8.png

 

Look, I do agree that House prices will be more "sticky" to the downside. We are seeing

that already, I think. But so long as the builder stocks remain under severe downwards

pressure it should make sense to stay away from buying property. And even if there is

a bounce which turns into a move breaking the downtrend, I still think you will have

another 6-12 months before UK property hits bottom.

 

I watched how well this bellwether worked in the UK, and then used HK propertydeveloper

share price movements to help me time my aggressive move into Hong Kong property,

just under one year ago. I will remain learn, andwatch for signs of a breakdown in that

indicator.

 

Here's the cycle from another thread:

 

18yrctxut5.gif

 

I think the US builders may bottom in 2008 or 2009, after a sharp fall*

...and the UK builders maybe a year later.

I would then be alert for a buying opportunity within 12 months of that bottom.

 

- - -

 

*Sharp Fall?

Here's an update of the CTX/Centex chart for the last ten years

 

bigmd0.gif

 

It is not impossible that we have seen the lows already.

But the 18 1/3 year cycle would suggest a low next year (2008) or maybe 2009

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Latest CS index out.

 

Down 6.7% from a year earlier - that exceeded the previous record fall of 6.3% in April 1991.

Aftewr that fall, US real estate rallied sharply from its low. Are we about to see that again?

 

 

What some economists are quoted to be saying:

 

+ "The market is working its way back to reality," says David Seiders, chief economist

of the National Association of Home Builders. He thinks that U.S. home prices will

bottom out by early 2009. (Previously, he was saying sometime in 2008- so it's a

moving target.)

 

+ Some other economists say that (a bottom in the US) may not happen before 2010

 

+ "The housing shock is only about halfway over, and US housing prices will continue to

fall well into 2009," says Lehman Brothers economist Michele Meyer.

 

 

Here's one of those old Builder cycle charts*, showing how CTX bottomed around 1990.

18yrctxut5.gif

 

- so I ran a close-up of three years (1989-91), to see how CTX moved back then.

 

bignu7.gif

 

I'm still trying to get a fix on the exact bottom of that C-S data series, but for CTX,

we saw a low in Oct/Nov.1990, and I would expect that to LEAD by perhaps 6-12 months.

How might this three year period look from 2006-2008

 

Centex Corp (CTX) ... update : weekly : daily // monthly-JOE

bigxr7.gif

 

It is interesting that in both periods, there was a sharp fall into November.

Is it just possible that we have seen an important low??

 

The biggest fallers in the last 12 months, were the markets that were previously the hottest, like:

 

Miami...... : - 12.4%

San Diego : - 11.1%

Las Vegas : - 10.7%

Phoenix.... : - 10.6%

 

Might these locations be a good place to look for bargains with 12 months of the stocks bottoming?

-------- -

 

* From the First GEI video/ UK Property Cycle thread, in the GEI-in-the-media section

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+ "The housing shock is only about halfway over, and US housing prices will continue to

fall well into 2009," says Lehman Brothers economist Michele Meyer.

 

Here's one of those old Builder cycle charts*, showing how CTX bottomed around 1990.

18yrctxut5.gif

 

I like that CTX monthly chart. (have added other links above too.)

 

Here's a similar one for St.Joe (JOE) ... update-2006-8 : weekly : daily

bigqy1.gif

 

Notice how JOE bottomed right ON the 200mo.MA !

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(From Mish Shedlock):

 

The epicenter of real estate fallout has to be Florida.

A 25 member committee is now addressing Florida Taxation and Budget Reform.

 

Good luck with that.

 

This quick review clearly shows that Minyan Peter was spot on with his assessment that 2008 will be a year of choices: personal choices, household choices, city choices, state choices, and even national choices

 

/: http://www.howestreet.com/articles/index.php?article_id=5390

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Florida RE buyers need A1 Credit Rating and 20% deposit>

Cash purchase and refi possible after 12 month wait.

However the wall of unsolds is vvv high plus now communities based around a golf course are in touble as the Country Clubs close down due to overlevraging. Communities though do get together and buy the club to keep them going. Hard work but a local solution. If they did not they zould see another 20% drop in value for a house near a closed country club.

 

Arn

Get rid of the US no recourse home loan

 

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...communities based around a golf course are in touble as the Country Clubs close down due to overlevraging. Communities though do get together and buy the club to keep them going.

 

Long term, these will be good, since teh golf courses can be turned into farms.

But dont expect to be playing golf there in 5-10 years

 

Listen up:

David Holmgren on the Endurance of Suburbia

http://hk.youtube.com/watch?v=iTYe8WloF1U

 

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Time to start watching JOE more closely again?

 

St. Joe ... Weekly-since-1991 : wk-2006 : Daily-12mo : Daily-6mo : 3mos

joers.gif

 

Look how the peak earlier this year ($37.44) came right on the 200week MA. A great short there, since it closed yesterday at:

 

JOE: $17.55 Change: +0.02 // Percent Change: +0.11% // range ($17.25 to $37.44)

Open: 17.39 High: 17.88 Low: 17.25 // Volume: 1,157,934

 

Other property-related stocks have also trended lower:

====

PHM : $ 6.27 - $0.23 - 3.67% / range ($6.25 - $13.91)

HOV : $ 3.80 + $0.10 +2.65% / range ($3.40 - $8.05)

HGX : $94.90 - $1.82 - 1.92% / range ($87.09 - $132.53)

IYR- : $53.46 - $0.38 - 0.71% / range ($41.58 - $57.97)

 

JOE, Close-up - last 6 months ... update : 3mos : 10days

joem.gif

 

Is JOE - a major Florida property owner headed into a "tradable low"?

 

The last big drop in 2009 was followed by a reasonably quick "V" recovery ... 6mos : 3mos

joe08b.gif

 

After the selling slowed down, it tooks some heavy buying to turn JOE around, and the overall market was headed up then too.

 

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Intersting you point out St Joe. In a recent interview David Einhorn (Greenlight Capital) said that was one of his shorts.

http://pragcap.com/david-einhorn to see the full interview.

Sure.

Somebody has been selling it down!]

I'm not ready to buy it yet. I would want to wait for the 3d.MA to stall out and comeback up and cross the 8d.Ma

and for the 21dMA to flatten out. These will take time.

 

Also, in the previous low the slode was breaked by 2 or 3 days of strong buying volume. We havent seen that yet either

 

Then there's the need for some fundamnetal analysis - which I havent done yet

 

By the time I am ready to buy it, Einhorn may be set to cover his shorts

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== The Best way to speculate on Florida Property? : Is it St.Joe Company (JOE) ? ==

As of December 31, 2009, the company owned approximately 577,000 acres of land concentrated primarily in northwest Florida, as well as approximately 405,000 acres in the coast of the Gulf of Mexico.

 

JOE's Mkt Cap : $1.61 Billion

Shares OS---- : 92.74 Million x $17.36

 

Cost per acre :

(1) :: $1,610 Million / 577,000 = $ 2,790

(2) :: $1,610 Million / 982,000*= $ 1,640

========

*( 577,000 NW Fla. + 405,000 Gulf coast)

 

With nearly a million total acres, St. Joe owns about 3% of the state of Florida.

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Short St. Joe, Long Getty a Good Real Estate Market Neutral Trade ?

 

As I mentioned in a previous article, although my gut feeling is bearish right now, my gut doesn't have a great track record at market timing. Because of that, I've started putting cash to work in market neutral trades every couple of weeks. For today's market neutral trade I shorted St. Joe Co. (JOE) at $17.99 and bought an equal dollar amount of Getty Realty (GTY) at $29.03.

 

GTY / Getty Realty Corp (NYSE) ... update

gty.gif

 

I had bought puts on JOE last June, as I noted on Short Screen's message boards at the time, and sold them for a 39% profit in October, after David Einhorn presented his updated short case for JOE at the Value Investors Conference. As I blogged at the time, Einhorn’s take down was brutal. Market Folly has the audio of Einhorn’s presentation, along with the slide show that accompanied it here. If you’re pressed for time, just listen until he gets to slide #11 and the crowd erupts in laughter.

 

Einhorn's short case for JOE, in a nutshell, is that the company's rural, Florida panhandle land costs more to develop than it's worth (he estimates the company's rural land, the bulk of its assets, is worth $7-$10 per share). The problem for bulls who believe that this land will be worth a lot more in the long term is that JOE's management has to sell tens of thousands of acres of it every year to cover its $50 million annual operating expenses. So it may not have any land left if and when Florida has another real estate boom.

 

Audit Integrity gives JOE an Accounting and Governance Risk (AGR) score of 34, on a 100-point scale, which puts it in the "Aggressive" category.

 

Insiders have been net sellers of JOE over the last three months, though net buyers over the last 12. The most prominent insider is the biggest institutional holder, Bruce Berkowitz's Fairholme Fund.

 

 

JOE had been on my radar screen since last month as a short candidate for a real estate market neutral trade, but I had trouble finding a candidate for the long side. After not finding anything attractive among real estate management companies, I started looking at REITs and found Getty (GTY), which mainly owns gas stations. GTY has fairly low leverage for a REIT and currently yields 6.5%. It was one of the REITS Alan Brochstein mentioned in his recent Seeking Alpha article, 9 Obscure REITs Yielding More Than 5% With Low Leverage.

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