St Joe goes all in for real estate development

[fieldafm]

Wow!
Always thought I would be a very old man before Joe went out of the timber business all together.

http://www.bizjournals.com/jacksonville/news/2013/11/07/st-joe-sells-nearly-400000-acres-in.html

[kbhanson3]

St. Joe has undergone quite a transformation since Peter Rummell shifted its focus to real estate development when he took the reins in 1997.  While the size of the transaction is eye-popping, the decision to monetize what amount to non-core assets for a real estate development company is no surprise.

[fieldafm]

It makes sense from a cash perspective, especially given the requirements to develop the future pipeline of undeveloped land.  Just didn't think they would make this big of an exit from that portion of their business so soon, given how the investment community values that part of their asset holdings.  Clearly the new board feels the development portfolio is worth more than the market does.

[kbhanson3]

Maybe it was just a case of too good of a deal to pass up.  To monetize that many acres in one transaction at what does not appear on the surface to be a discounted value is a rare opportunity.  Also, the steady cash flow of the timber business is positive on one hand, but for some reason it has also seemed to complicate the story for many analysts over the years.  The same was true with FECI when it had the FEC Railway and Flagler Development.  The analysts wanted it to be either a transportation company or a real estate company.  Mixing the 2 confused the story.  Maybe current JOE management is also looking to simplify the story in addition to stockpiling cash.