The St. Joe Company
) - a real estate investment trust (REIT) - reported its
third-quarter 2013 earnings of 5 cents per share, beating the
Zacks Consensus Estimate of 1 cent. However, results were below
the prior-year quarter earnings of 17 cents per share.
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For the third quarter of 2013, total revenue at St. Joe was $36.8
million, comfortably surpassing the Zacks Consensus Estimate of
$31 million, but 34.1% below the prior-year quarter figure of
The results were mainly driven by lower expenses in the quarter.
Also, the company experienced growth in revenues from its
resorts, leisure and leasing operations. However, lower real
estate sales and a decrease in timber volume were the dampeners.
Following the quarter end, St. Joe penned a deal to sell around
382,834 acres of timberland for $565 million. The closure of the
deal is subject to the nod from the company's shareholders and
the final price is dependent upon adjustments laid down in the
sales agreement. The aggregate carrying value of the land that is
to be sold is around $54 million as of Oct 31, 2013.
Quarter in Detail
By segment, real estate sales revenues moved down 60.2% year over
year to $12.8 million. An increase in the number of residential
lots sold in the company's primary home communities led to a
10.3% rise in residential real estate revenues.
The company also experienced a $2.1 million increase in revenue
related to specific sales of operating properties. However,
commercial real estate and rural land sales revenue were minimal
in the reported quarter compared with a total of $22.5 million in
the prior-year period.
Revenues from resorts, leisure and leasing operations increased
15.6% year over year to $16.3 million. Higher average room rates,
significant number of homes in its vacation rental business as
well as the positive impact of commercial leases led to an uptick
in the segment's revenue.
However, revenue from the timber sales declined 19.8% year over
year to $7.7 million. Notably, unusually heavy rainfall over the
summer months led to a decrease in the volume of timber
On the other hand, expenses registered a 17.5% decline from the
prior-year quarter to $33.4 million. Lower cost of real estate
sales and timber sales as well as a drop in other operating
expenses primarily contributed to the decline.
St. Joe exited the quarter with $22.8 million of cash and cash
equivalents (down from $166.0 million as of the year-end 2012)
and $26.4 million of pledged securities (slightly below from
$26.8 million). Also, total debt outstanding was $37.8 million,
up from $36.1 million as of the prior-year end.
We are encouraged with the better-than-expected results at St.
Joe. The company is making efforts to maximize shareholder value
by focusing on its residential resort communities, primary homes,
and the active adult residential market.
Its recent deal for timberland dispositions also augur well. The
move will aid the company in streamlining its focus on its core
activity of real estate development in Northwest Florida and the
proceeds reaped would enhance its liquidity as well as finance
its growth needs. It also aims at reducing its expenses to
improve its bottom line.
Yet, a persistent reduction in revenues from the rural land sales
segment somewhat reduces the growth in profitability. Moreover,
the company is continuing to experience a tepid and intermittent
pace of commercial activity.
St. Joe currently has a Zacks Rank #3 (Hold). However, other
REITs that are performing better and are worth a look include
BRE Properties Inc.
Cousins Properties Incorporated
Jones Lang LaSalle Incorporated
), all of which carry a Zacks Rank #2 (Buy).