More on St. Joe's land. Remember, Mr. Market is willing to sell it to you tomorrow for $13,000 an acre. Raw land is roughly 1/6 of a house price, rule of thumb as I recall it from my real estate days. Florida home prices for $85,000? I don't think so.
Disney is selling 1/3 acre lots in its Celbration development outside Orlando for about $80,000 a lot. That's not raw land, so you've got to adjust for development costs, but take half of that as a benchmark for, granted, a top quality property. St. Joe itself is already selling half acre beachfront lots on the panhandle for hundreds of thousands of dollars. Six blocks in downtown Miami? You think you could buy that for $13,000 an acre? In addressing the inevitable counterargument, even if a lot of those 50,000 acres are swampland (which I don't think is true) these parcels more than make up for it. How about this - St. Joe closed a condemnation sale to the state of Florida for $120,000 an acre last year. They just announced another sale to the state - I don't have the figure in front of me, but it was several times the $13,000 benchmark.
[Just a note - in valuing this land, forget about the book value. The company purchased the majority of its assets in the 1930s. Much of it is still on the books for like 50 bucks an acre.]
The new CEO (came from Disney) hired a well respected CFO from Promus and a completely new top management team from Disney and prominent Florida developers. You'd have had to talk to the old management to really understand how eager shareholders are to pay these guys whatever they want. Their background is real estate, Florida specifically. A lot is still unclear, but the pieces are coming together. Rummell (CEO) will probably take an ad-hoc approach. Some hotels, some premier housing developments, some office buildings. He just bought a golf course developer. He has bought one of the top master planned residential developers in Florida. He has a JV with one of the top private commercial developers. AND HE OWNS 3% OF THE LAND IN THE STATE. (I like assets that nobody can replicate - either you own it or you don't.). All the pieces are now in place, the real estate cycle is perfect for a landowner - and now we have Wall Street's attention.
(And I suspect that the exposure to Southeast Asia is somewhat less than multinational darlings that dominate the S+P. Somebody provided me with a link last week between Southeast Asia meltdown and Florida real estate, but it would have required the rest of the market to crash first. So if you want to sell everything, sell this too. But if you'd hold onto one...) |
