I'm not in office real estate...can someone explain why it sells for more than double the assessed value?
QuoteCSX buys 550 Water St. for $30 million
Wednesday, December 3, 11:41 AM EST
By Karen Brune Mathis, Managing Editor
CSX Corp. bought the 550 Water Street Building on Tuesday for $30 million.
Jacksonville-based CSX, through The Atlantic Land and Improvement Co., bought the Downtown property from BP Graham LLC, based in Alabama. The sale was recorded Wednesday with the Duval County Clerk of Court.
The transportation company leases almost 75 percent of the structure, which sits next to its riverfront headquarters at 500 Water St.
The Atlantic Land and Improvement Co.'s officers comprise executives with CSX Transportation and CSX Real Property Inc.
The 14-story 550 Water Street building comprises 234,310 square feet, according to the Duval County Property Appraiser's office. CSX occupies 172,000 square feet, or all but three floors.
BP Graham LLC of Birmingham, Ala., bought the building for $23.3 million in October 2007. The structure, built in 1982, carries a 2015 assessed value in progress of $14.25 million and sits on 1.9 acres.
It is the sixth Downtown high-rise to be sold within a year. On the Southbank, Riverplace Tower was sold in October and the Aetna Building sold in December. On the Northbank, the Wells Fargo Center was sold in June, the Bank of America Tower in July and EverBank Center in September.
http://www.jaxdailyrecord.com/showstory.php?Story_id=544430
It's not a surprise that CSX is gonna stay here.
#inferioritycomplex
Quote from: ProjectMaximus on December 03, 2014, 12:10:48 PM
I'm not in office real estate...can someone explain why it sells for more than double the assessed value?
http://www.jaxdailyrecord.com/showstory.php?Story_id=544430
Because Assessed values are generally bogus numbers, that are held low to avoid property valuation appeals.
Simms can provide a better breakdown probably. The place is almost fully leased. And it already has all the needed improvements. So the value is higher.
I would bet that this helps reduce their operating ratio and will have no bearing on any future mergers and acquisitions.
Shifting a monthly lease expense to a one time increase in assets. One time dip into cash to buy, but long term reduction in expenses.
Quote from: Lunican on December 03, 2014, 01:10:20 PM
I would bet that this helps reduce their operating ratio and will have no bearing on any future mergers and acquisitions.
But wouldn't an M&A reduce the need for all that office space in Jax? In any case, I see this as a good thing for both the RE market and CSX's bottom line.
Quote from: vicupstate on December 03, 2014, 12:40:45 PM
Quote from: ProjectMaximus on December 03, 2014, 12:10:48 PM
I'm not in office real estate...can someone explain why it sells for more than double the assessed value?
http://www.jaxdailyrecord.com/showstory.php?Story_id=544430
Because Assessed values are generally bogus numbers, that are held low to avoid property valuation appeals.
Well, the article states that the assessment is just for the structure, so the land value/cost is not included. Also, the assessed value is established for the purposes of taxing, so it doesn't directly say anything about the market value. While it correlates with market value, the two are not the same.
Quote from: I-10east on December 03, 2014, 12:22:52 PM
It's not a surprise that CSX is gonna stay here.
#inferioritycomplex
No I-10 East, it has nothing to do with a 'inferiority complex.' Several of us on here are industry people and we can all tell you three things are a certainty.
1. The first shots of the final round of mergers has been fired already, NS is getting cozy with CP... all hell is going to break loose when someone makes that fateful last move. The industry will quickly contract from 7 major railroad systems in North America to 3 or 4.
2. This has been written about ad infinitum, now or later, it is about to happen.
3. CSX and Jacksonville do not have the size, strength or local footprint to hold back a tsunami of Union Pacific's, Burlington Northern Santa Fe's or Canadian railroads... When it comes, we will be like a bucket of beach sand in the surf.
Pretty sure CSX made almost $2 Billion last year. That's been their average for a few years, so this is a drop in the bucket for them. I would have loved to see them purchase and renovate the Marble Bank Trio, because they could afford to do it right. They have to do something with all the profits, so buying a building they were leasing makes sense.
Also, assessments do tend to run lower than market values.
Quote from: Ocklawaha on December 03, 2014, 09:14:19 PM
No I-10 East, it has nothing to do with a 'inferiority complex.' Several of us on here are industry people and we can all tell you three things are a certainty.
1. The first shots of the final round of mergers has been fired already, NS is getting cozy with CP... all hell is going to break loose when someone makes that fateful last move. The industry will quickly contract from 7 major railroad systems in North America to 3 or 4.
2. This has been written about ad infinitum, now or later, it is about to happen.
3. CSX and Jacksonville do not have the size, strength or local footprint to hold back a tsunami of Union Pacific's, Burlington Northern Santa Fe's or Canadian railroads... When it comes, we will be like a bucket of beach sand in the surf.
CSX turned down CP's request to merge nearly two months ago. CSX has been eying 550 Water Street for a lil' while. Any speculation of some surprise merge should've been completely out the window with those two actions alone...I don't even have any problem with the speculation being mentioned, but does it have to be within the title of the thread?
I'm not sure what those railroads out west have to do with CSX, but whatever; Trying to directly compare CSX with them is conjuring a false pessimistic and gloomy atmosphere. CSX's main comp is Norfolk Southern, and it's one of three on the Eastern Seaboard. There are alot of things that has to happen for any merges, so I don't get this 'monkey see monkey do' craze of every railroad being forced to merge/acquisition like out west where it's less dense.
I have a friend whose office was in the building, a year or two back the management declined to renew his lease because CSX was going to take over the whole floor. My understanding is over the past few years they've already become the majority tenant in there, under the circumstances it probably makes financial sense for them to quit paying someone else's profit and just own it.
QuoteCSX turned down CP's request to merge nearly two months ago. CSX has been eying 550 Water Street for a lil' while. Any speculation of some surprise merge should've been completely out the window with those two actions alone...I don't even have any problem with the speculation being mentioned, but does it have to be within the title of the thread?
I'd be shocked if CSX doesn't enter into a merger agreement with another railroad in the next 3 years.
QuoteThey have to do something with all the profits
Yes, it's called paying dividends and having cash available for the massive costs related to future maintenance of their infrastructure needs. They shouldn't be in the business of developing downtowns.
Quoteit probably makes financial sense for them to quit paying someone else's profit and just own it.
Bingo.
Quote:
"Yes, it's called paying dividends and having cash available for the massive costs related to future maintenance of their infrastructure needs. They shouldn't be in the business of developing downtowns."
Unless it's where your corporate headquarters are located, and is a 'dumpster fire' of a downtown, in which case it makes pretty good sense to make it a more attractive place for the citizens of said city and more attractive to other corporations which then might want to move there, thereby increasing the value of your corporate headquarters which reside on a premium waterfront parcel in the 'dumpster fire' of a downtown.
Sort of like what Khan is proposing to do with the Shipyards. It has nothing to do with his football team, but sure makes the City of Jacksonville appear to be a lot better place (when seen on TV) than it currently is.
^^^A quote from who?
I-10E, fieldafm is dead on in his prediction. It might not fit the timeframe exactly, we have approached this point several times only to see everyone shy away. Most of that was due to the recent economic hard times but with the investment of Billions of dollars in plant improvements things have reached the point where nearly all properties are seen as ripe for the picking. I-10E the western roads are the most profitable in the nation, and well over half of all freight traffic in North America moves east-west-east, not north-south-north. Union Pacific $52.5Bn is 61% more valuable then CSX @ $32Bn, or NS @ $33Bn next to BNSF @ $41Bn.
Now the funniest part of all of this is the little 300 mile Florida East Coast Railway, from Jacksonville to Miami, which is part of FECIndustries, Flagler, Flagler Logistics, Parallel Infrastructure, All Aboard Florida and owned by Fortress Investment Group wields some $66Bn in total assets.
This JBJ article doesn't sound like any doom and gloom 'CSX must merge or else' news at all...
Citi Analysts: CSX a "must own" as earnings growth acceleratesQuoteCitigroup research analysts upgraded CSX from neutral to buy on Thursday, naming the company a "must own."
Saying the Jacksonville-based railroad company "is in the early stages" of earnings per share growth acceleration, the analysts raised its target price for the company (NYSE:CSX) from $34 a share to $41.
After dropping from its opening price of $37.27 Thursday, the stock has been slowly but steadily rising today.
The Citi analysts said they were upgrading their view in part because of the company's re-focusing on costs in the wake of Canadian Pacific Railway Ltd. pitching a merger to CSX. Another reason for the boost is that the company has nowhere to go but up, the note said. "CSX also has the highest operating ratio of the industry, providing potential for margin and EPS [earnings per share] improvement longer term," the note says.
Operating ratio is a measurement of how efficient the railroad is, with a lower number reflecting greater efficiency: In the third quarter, for which results were released in October, CSX had a ratio of 69.7 percent, a 2.22 percentage point improvement.
Earnings per share were 51 cents in that quarter, up from 45 cents a share in the year-ago quarter.
Earnings per share were 42 cents in the fourth quarter of last year ; the Citi analysts raised their expectations to 49 cents for the fourth quarter of 2014. The company is in the process of growing its earnings by a rate in the mid-teens, according to the analysts, after eight quarters of earnings per share growth less than 10 percent.
At the Credit Suisse Global Industrials Conference on Wednesday, CSX chief financial officer Fredrik Eliasson told investors and analysts that the company is on track this fourth quarter and service is stable.
"Fourth-quarter volume is tracking at the level we expected, and we are seeing strength across nearly all markets we serve," Eliasson said, according to a statement. "Longer term, we remain focused on the three key levers that deliver superior shareholder value: pricing above inflation, driving ever more efficient operations and growing our merchandise and intermodal businesses faster than the economy by developing new customers on our network, investing in our intermodal business and leveraging the benefits of the new energy environment."
The company is also positioned well in comparison to its competitors, the Citi analysts said: CSX is more heavily involved in intermodal shipping than Canadian Pacific or Norfolk Southern, and that's an area where it will be able to increase its pricing. "We see the potential for market share gains from Norfolk Southern across commodities if rapidly declining service at that rail is not contained," the note said.
http://www.bizjournals.com/jacksonville/news/2014/12/05/citi-analysts-csx-a-must-own-as-earnings-growth.html
I've tried to explain this to you, but unfortunately, you seem to have a knee jerk panic reaction to anything that represents change. The mergers are coming. This certainly isn't 'doom and gloom,' and in fact, we would most likely be given a shot at HQ no matter who merges with CSX. The likely partners being Union Pacific and a Canadian railroad. Not that we are anywhere near the center of such a giant coast to coast railroad, but we have one thing that nobody else can offer... F L O R I D A ! But reading the JBJ and folding our arms and saying, 'were safe,' would be a fools errand, if anything we need to polish our chances at being named the future home of ???? railroad corporation. Somebody that doesn't get their railroad news from Citi or JBJ should be working to get us into a very desirable position nationally. Even so, due to geography, and traffic volumes, routes and directions, we are not even close to a place they might want to choose, thus we really need to step up this game.
By the way JBJ, the Citi analysts might have said: "CSX is more heavily involved in intermodal shipping than Canadian Pacific or Norfolk Southern." HARDLY! Norfolk Southern and Burlington Northern Santa Fe are the two leading intermodal rail carriers in North America. Intermodal on those two roads represent nearly 50% of all traffic volume. You might also want to remember that containers are a much higher priced, priority freight compared to coal, sand or wood chips. Such a traffic mix is what makes NS (which is slightly smaller then CSX) a more valuable property.
Read or believe whatever you'd like, but don't be surprised if someday soon the CSX sign comes down and UNION PACIFIC goes up... or...the building goes dark. Who knows? But we should be courting UP (aka: 'Uncle Pete') right now!
Quote from: Ocklawaha on December 06, 2014, 01:41:48 PM
I've tried to explain this to you, but unfortunately, you seem to have a knee jerk panic reaction to anything that represents change.
CSX is gonna be Union Pacific (despite not ever crossing the Mississippi) but I'm 'knee jerk reaction' person? Get real...By your theory being number 2, 3, 4 etc is a complete failure; Well tell that to Target, Wendy's, Burger King, Citi Bank etc etc etc. Union Pacific has 52.5 billion 'way more' than CSX at 32 billion; Bill Gates has 81 billion 'way more' than Mark Zuckerberg at 32 billion, no one's in the poor house, so what's your damn point? Continue on with the manufactured doom and gloom for your political purposes Ock and other tin foilers...
And yes, CSX will be UP or BNSF (less likely) they connect at Chicago, St. Louis, Memphis and New Orleans with a technology known as a 'bridge.'
Perhaps you are just not capable of understanding the difference between massive expansion, new business, new frontiers and 'doom and gloom.' The coming merger of the major railroads is certainly NOT doom and gloom. However if we act stupid and ignore it, it will likely pass us by as CSX
will not be the surviving company in any mega-merger. Union Pacific could pretty well eat the balance of the industry single handedly if they really wanted to. But the idea of having ports in Seattle, Portland, Oakland/San Francisco, Los Angeles, Long Beach, Houston, Port Arthur, New Orleans AND Mobile, Pensacola, Tampa, Miami, Fort Lauderdale, West Palm, Jacksonville, Brunswick, Savannah, Charleston, Wilmington, Norfolk/Newport News, Baltimore, Philadelphia, New York and Boston has got to look pretty good from Omaha.
Here is what the tin foilers of doom and gloom in the railroad industry poor house are actually saying:
QuoteUnion Pacific + CSX
Most observers consider it unlikely that Union Pacific would initiate a transcontinental merger, given its recent operating and financial struggles. UP's stock declined from February 2004 to February 2005‑—‑the only major railroad stock to go down in that period. Nonetheless, Union Pacific remains the largest railroad in North America, in both route-miles and revenues, and it commands enormous financial resources. If UP decides to seize the initiative and beat BNSF to the punch in acquiring an eastern carrier, it could easily summon the means to carry out the strategy.
Union Pacific and CSX are already cooperating on transcontinental services, including Express Lane perishables to the Northeast and the double-stack trains UP runs for CSX Intermodal. Putting these services under single-line management would be the primary public benefit a UP-CSX combination would create. The railroads meet at Chicago, St. Louis, Memphis, and New Orleans, but neither goes any farther. Thus, there are no parallel lines to combine or rationalize. Because Union Pacific and CSX do not compete head-to-head, there would seem to be little need for conditions to preserve competition if a merger were announced. But it's likely BNSF and Norfolk Southern would respond quickly with a merger of their own.
BNSF Railway + Norfolk Southern
Profitability and an excellent physical fit are two strong factors working in favor of a merger of BNSF and Norfolk Southern. NS and BNSF share track in Missouri leading right into BNSF's Argentine (Kans.) Yard, and also meet at Chicago, Streator, Ill., St. Louis, Memphis, Birmingham, New Orleans, and (through KCS haulage) Fort Worth, opening up a variety of single-line routes. BNSF is only slightly larger than Norfolk Southern in revenues and market capitalization, making an outright takeover unlikely. Rather, the combination would be more a "merger of equals."
The biggest public benefit a BNSF-NS merger could bring about would be the creation of a new transcontinental main line that completely bypasses Chicago, by linking NS's ex-Wabash line from Detroit and its portion of the former Water Level Route at Butler, Ind., to BNSF's Kansas City lanes. That route exists today, but it isn't used to its fullest potential because NS is naturally inclined to push westbound traffic through Kansas City, while BNSF maximizes its profits by interchanging eastbound traffic at Chicago.
Diverting traffic from Chicago might reduce the roads' capital needs there, and potentially scale back the cost of the $1.5 billion CREATE project, a rail infrastructure improvement program to reduce bottlenecks in the Chicago area. All six major U.S. railroads have committed funds to CREATE, but the lion's share of the money is expected to come from federal sources through the stalled transportation reauthorization bill now in Congress. (BNSF-NS might have to invest in sidings or double track for the Wabash.)
Other than the open-gateway issue, competitive impacts associated with this merger appear to be slight. "Two to one" points are limited to places like Carrollton, Mo. Both BNSF and NS have lines between Memphis and Birmingham, and UP may argue it should get one in order to connect with CSX at Birmingham for competing service to Atlanta. Aside from the obvious counter-move of a Union Pacific-CSX merger, one side effect of a BNSF-NS combination might be a bidding war over Kansas City Southern, since the Meridian-Fort Worth route would become strategic to both BNSF-NS and UP-CSX.
Union Pacific + Norfolk Southern
If BNSF were to put a bid for Norfolk Southern on the table, there's no guarantee Union Pacific would meekly accede and pursue a retaliatory merger with CSX. Instead, UP might try to outbid BNSF, if it considers Norfolk Southern a better merger partner. Union Pacific made a hostile bid for the Santa Fe after the BNSF merger was announced in 1994, then settled for a combination with Southern Pacific only after it had run up the price Burlington Northern paid Santa Fe stockholders.
Once again, the key public benefit of a Union Pacific-Norfolk Southern combination would appear to be the use of the former Wabash as a Chicago bypass for transcontinental traffic. In UP's case, the Wabash would be a logical route east for Southern California freight coming off the Golden State Route at Kansas City and loaded coal trains headed east from Colorado and Wyoming.
SOURCE: TRAINS MAGAZINE
For the benefit of those who enjoy actually reading and learning from others with experience in our various industries, I'd like to add that there could also be an unexpected beneficial 'fall-out' from these future mergers.
The result of these mega-mergers will be contraction of the core systems. For example, nobody would be very surprised if a UP/CSX/CN system, decided to spin off all former CSX trackage south of Jacksonville (about 2,000 total miles). This type of contraction will take place all across the country as the master railroad picks and chooses where it's primary through corridors are and which corridors could and would feed them regardless of ownership.
Of course anything could happen but when the dust settles, it will be a different world. It is possible that we could see the birth of a 'new' 'FLORIDA WEST COAST RAILROAD' using the former CSX A and S lines south of Jacksonville, with Union Pacific trains rolling north (through Callahan) and west (along US-90 Beaver St), while FWC and FEC trains took the connecting freight southward.
Other scenario's which will occur all across the country will be similar to the typical merger trade-off's with mutual benefits. A fairly recent example of that locally was the abandonment of the NS from Lake City to Palatka (paper mill) in exchange for NS operating over the CSX 'A' line tracks from Jax into Palatka. This was a trade, it allowed CSX to abandon it's trackage from Thomasville - Perry (paper mill) - Dunnellon in exchange for CSX operating over the NS tracks from Adel into Perry. In 1995, the NS line was spun off to an independent feeder shortline company that serves as in important connection to both NS and CSX. In this manner I could see (in my crystal ball) a swap, where the UP/csx gave up the 'S' line from Jax to Tampa in exchange for rights to the BNSF/ns route from Los Angles to San Diego.
Railroad guys getting railed at the 12/10/14 Jacksonville Waterways Commission meeting right now. Still at the podium
CSX is looking better than it's peers, according to the Susquehanna Financial Group.
http://www.bizjournals.com/jacksonville/news/2016/01/26/csx-looking-better-than-peers-according-to-analyst.html