I guess CSX plans to be here for the long haul

[ProjectMaximus]

I'm not in office real estate...can someone explain why it sells for more than double the assessed value?

CSX 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

[I-10east]

It's not a surprise that CSX is gonna stay here.

#inferioritycomplex 

[vicupstate]

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.

[spuwho]

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.

[Lunican]

I would bet that this helps reduce their operating ratio and will have no bearing on any future mergers and acquisitions.

[spuwho]

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.

[ProjectMaximus]

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.

[PeeJayEss]

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.

[Ocklawaha]

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. 

[MusicMan]

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. 

[I-10east]

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. 

[ChriswUfGator]

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.

[fieldafm]

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'd be shocked if CSX doesn't enter into a merger agreement with another railroad in the next 3 years.

They 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.

it probably makes financial sense for them to quit paying someone else's profit and just own it.

Bingo.

[MusicMan]

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.

[I-10east]

^^^A quote from who?