Jump to content

Berkowitz May Have the Last Laugh - Florida Land Looking VERY Interesting


Recommended Posts

These two articles refer to Miami but all of coastal Florida could be in play in a few years:

 

http://www.bloomberg.com/news/2011-06-21/brazilians-buy-miami-condos-at-bargain-prices-after-45-surge-in-currency.html

 

Surging real estate prices in Brazil and the currency’s 45 percent gain against the U.S. dollar since 2008 are sending Brazilians to South Florida in search of bargain vacation homes and property investments. That’s helping bolster Miami’s condo market, with total sales increasing 92 percent in the first four months of 2011 from a year earlier, according to data from the Florida Association of Realtors.

 

http://www.cnbc.com/id/43473337

 

Lawmakers are widely expected to liberalize Florida's gambling laws, sooner rather than later, however. And analysts say Genting has the deep pockets and "patient capital" to start laying the groundwork now for future business.

 

"I believe Miami is destined to become one of the greatest global cities in the world," Genting Chairman and Chief Executive KT Lim told a gathering of Miami business and civic leaders last week.

 

"With planes now able to fly nonstop from Singapore and Hong Kong, Miami will soon connect Asia with the Americas," he said.

Link to comment
Share on other sites

  • 2 months later...

Interesting.  I live in FLA and Miami is a very different place than the panhandle where Joe owns a lot of their property.  In florida we call the panhandle southern alabama!  The weather is much colder, the water murky, the waves milder, etc...  It does have a natural beauty IMO though.

 

JOE needs to go up by quite a bit and quickly in order for Berkowitz to get a good IRR on this though.  I just can't see it happening for a long time.  Huge areas in florida with empty developments in much 'nicer' and warmer areas than the panhandle!

Link to comment
Share on other sites

Berkowitz is diversifying from the leisure market for St. Joe land and is pushing hard for foreign business development.

 

http://www.miamiherald.com/2011/03/28/v-print/2134611/bruceberkowitz-saving-st-joe.html

 

Bruce Berkowitz’s mind is racing with thoughts of Asia and Northwest Florida.

 

The Miami-based mutual fund manager has recently returned from trips to the Panhandle and South Korea, Singapore and Hong Kong. His $23 billion Fairholme Funds have invested $1.5 billion in two Chinese insurance companies during the past few months. And this week, he and Fairholme Capital Management President Charlie Fernandez will host the chairman of the huge state-owned Chinese Pacific Insurance Corp. on his first trip to Miami. They will tour the Panhandle and discuss business opportunities on the land owned by the St. Joe Company.

 

 

 

 

 

Interesting.  I live in FLA and Miami is a very different place than the panhandle where Joe owns a lot of their property.  In florida we call the panhandle southern alabama!  The weather is much colder, the water murky, the waves milder, etc...  It does have a natural beauty IMO though.

 

JOE needs to go up by quite a bit and quickly in order for Berkowitz to get a good IRR on this though.  I just can't see it happening for a long time.  Huge areas in florida with empty developments in much 'nicer' and warmer areas than the panhandle!

Link to comment
Share on other sites

The other Floridians commenting about the difference between southern Florida and JOE's land are spot on.  I'm from Jacksonville and my family has been in the raw land development and brokerage businesses for 25 years (primarily Northeastern Florida).  I wouldn't assume for a second that Brazilians are going to be buying condos in the Panhandle like they're doing in Miami.  Miami is a destination now the Panhandle isn't. 

 

This doesn't express a value as to JOE's land (it's worth tons, not sure how much per average acre) it's just a "talking down" to the longs.  JOE will take decades to play out so adjust your DCFs accordingly!

Link to comment
Share on other sites

The other Floridians commenting about the difference between southern Florida and JOE's land are spot on.  I'm from Jacksonville and my family have been in the raw land development and brokerage businesses for 25 years (primarily Northeastern Florida).  I wouldn't assume for a second that Brazilians are going to be buying condos in the Panhandle like they're doing in Miami.  Miami is a destination now. 

 

This doesn't express a value as to JOE's land (it's worth tons, not sure how much per average acre) just a "talking down" to the longs.  JOE will take decades to play out so adjust your DCFs accordingly!

 

Do you have any insight on the market in Daytona?  Any thoughts on Consolidated Tomoka's land?

Link to comment
Share on other sites

The other Floridians commenting about the difference between southern Florida and JOE's land are spot on.  I'm from Jacksonville and my family have been in the raw land development and brokerage businesses for 25 years (primarily Northeastern Florida).  I wouldn't assume for a second that Brazilians are going to be buying condos in the Panhandle like they're doing in Miami.  Miami is a destination now. 

 

This doesn't express a value as to JOE's land (it's worth tons, not sure how much per average acre) just a "talking down" to the longs.  JOE will take decades to play out so adjust your DCFs accordingly!

 

Do you have any insight on the market in Daytona?  Any thoughts on Consolidated Tomoka's land?

 

I'm fairly familiar with CTO but don't have any real insights.  I don't own it and don't really want to (for a few different reasons, primarily because I require a higher return than what I believe current stockholders will experience and prefer to stick with higher return assets with more of a catalyst in general).  I haven't valued it in a while but I wouldn't assume too many new raw land sales in the near future.  Not very much is happening with raw land in northeastern Florida. 

 

Interesting things could happen now that McMunn is going to be out of the picture.  Their actual land has huge potential, it's just a matter of making something happen.  They could put a new mall (sell the land to SPG perhaps) at the southeast quadrant of their southern I-95 interchange at some point for example, or a theme park is another game-changing possibility(CTO isn't that far from Orlando).

 

Have you seen their land? 

Link to comment
Share on other sites

Interesting... so both Bienvenue and Keil come from LUK... LUK has done commercial/residential real estate development on the FL panhandle... Berkowitz has been a LUK investor for something like 20 years...

 

Here's what I wrote when I bought JOE a couple months ago: http://mevsemt.blogspot.com/2011/05/new-coattails-to-ride.html

 

"Finally, after 10+ years I think there's a very real chance that JOE looks a lot more like a Leucadia or Brookfield Asset Management than its current self, which would make an investment at today's prices an absolute home run."

 

Obviously I have no idea if this will turn out to be right, but these recent hires give me hope...

 

 

Link to comment
Share on other sites

Breaking News!

 

Looks like the board of St. Joe is allowing Fairholme to buy up to 50% of the shares.

 

Could this be the holding company vehicle which becomes Berkowitz's Berkshire Hathaway?

 

I had mentioned this in another thread, but thought (and maybe still think)was only wishful thinking at the time. I hope the guys at at Fairholme are thinking the same. It would solve the redemption problem.

 

I have a small position unfortunately bough prematurely at a much higher price..

Link to comment
Share on other sites

The other Floridians commenting about the difference between southern Florida and JOE's land are spot on.  I'm from Jacksonville and my family have been in the raw land development and brokerage businesses for 25 years (primarily Northeastern Florida).  I wouldn't assume for a second that Brazilians are going to be buying condos in the Panhandle like they're doing in Miami.  Miami is a destination now. 

 

This doesn't express a value as to JOE's land (it's worth tons, not sure how much per average acre) just a "talking down" to the longs.  JOE will take decades to play out so adjust your DCFs accordingly!

 

Do you have any insight on the market in Daytona?  Any thoughts on Consolidated Tomoka's land?

 

I'm fairly familiar with CTO but don't have any real insights.  I don't own it and don't really want to (for a few different reasons, primarily because I require a higher return than what I believe current stockholders will experience and prefer to stick with higher return assets with more of a catalyst in general).  I haven't valued it in a while but I wouldn't assume too many new raw land sales in the near future.  Not very much is happening with raw land in northeastern Florida. 

 

Interesting things could happen now that McMunn is going to be out of the picture.  Their actual land has huge potential, it's just a matter of making something happen.  They could put a new mall (sell the land to SPG perhaps) at the southeast quadrant of their southern I-95 interchange at some point for example, or a theme park is another game-changing possibility(CTO isn't that far from Orlando).

 

Have you seen their land?

 

I haven't seen CTO's land.  I also don't see a near term catalyst.  However, it seems that you are getting the land for close to zero considering they have an investment property portfolio that produces over $9M annually.  As an investor, I would like to see them repurchase shares instead of using the income property proceeds to enhance current land.  The land improvements can always be done in the future.  Who knows how long we'll have the current low valuation to take advantage.

 

Link to comment
Share on other sites

Breaking News!

 

Looks like the board of St. Joe is allowing Fairholme to buy up to 50% of the shares.

 

Could this be the holding company vehicle which becomes Berkowitz's Berkshire Hathaway?

 

St. Joe isn't a substantial cash generator as the BRK textile business was when its working capital was freed up as the business declined.  The BRK textile business was a poor business, but BRK provided the money to buy National Indemnity which provided even more funds as float for investment.  The rest is history.  :)

Link to comment
Share on other sites

  • 4 weeks later...

Interesting article related to JOE:

 

http://www.starfl.com/news/port-23709-joe-week.html

 

Of particular interest...

 

The shakeup in leadership and strategy changes at St. Joe has led to what Port Authority board chairwoman Johanna White called a “joint effort” for job creation through the port.

 

The Apalachee Regional Planning Council has long voiced the sentiment that port development in Port St. Joe was a huge step in unlocking the economic potential of the county and region.

 

“Things have changed phenomenally,” Pitts said. “(St. Joe’s) strategy has changed and as a result we are working towards the same goals of jobs and creating economic activity. We have always known we needed to attract private funds. We see a private/public partnership as the best opportunity for port development. Now we see St. Joe as an ally in port development.

 

“(The Port’s coastal parcel) and mill site are actively being considered and marketed for port and marine activity (by St. Joe). That opens the prospect for port activity itself.”

 

Pitts added that the barge bulkhead, and access road, along the Intracoastal Canal offers options for new customers as does the access to rail that the port gained by the purchase earlier this year of the old Arizona Chemical property.

 

With potential development of the former mill site and the port’s so-called Parcel A, or coastal parcel, the port’s capabilities grow.

 

“Having properties that are developed has attracted the attention of customers,” Pitts said. “(Prasad) will learn about the attributes we do have here. We have so much going for us here.”

 

That includes close proximity to a federal shipping channel, over 100 acres of land in port hands, an adjacent wastewater plant, a significant source of freshwater in the Gulf County Canal, access to rail and two natural gas pipelines from the purchase of the Arizona Chemical property.

 

Pitts also cited developments at the state and federal level which will aid the case for port development.

 

and...

 

http://www.businessweek.com/news/2011-10-13/st-joe-co-promotes-park-brady-to-chief-executive-officer.html

 

St. Joe Co., the largest private landowner in northern Florida, promoted Park Brady to chief executive officer, the company said in a regulatory filing.

 

Brady, 64, joined Watersound, Florida-based St. Joe in March as chief operating officer, after a management shakeup driven by the company’s largest shareholder, Bruce Berkowitz, founder of Fairholme Capital Management LLC.

 

Brady won’t receive additional compensation for his new job, the company said. In March, St. Joe said Brady would be paid $750,000 a year plus benefits. He was previously president and CEO of ResortQuest International LLC, a Fort Walton Beach, Florida-based unit of hotelier Wyndham Worldwide Corp.

Link to comment
Share on other sites

  • 3 months later...

Two months later the "experts" begin to come around...

 

http://finance.yahoo.com/news/St-Joe-Upgraded-Outperform-zacks-596986764.html?x=0

 

Over the last few quarters, St. Joe has significantly reduced its debt through stringent cost-cutting measures and reduction in operating expenses. The elimination of debt greatly reduces the risk to shareholders and strengthens the balance sheet with a more efficient and less capital-intensive business model, giving the company the flexibility to weather any possible downturn in residential real estate.

 

Furthermore, St. Joe is the majority landowner in Northwest Florida, and most of the real estate developers in the region are forced to acquire land from it at high market price and subsequently build amenities in order to provide any meaningful competition to it. These offer a significant long-term competitive advantage to St. Joe.

 

I see a theme rising here:

 

1. Berkowitz recognizes value and buys

2. He is way too early and his idea flounders

3. "Experts" laugh at Berkowitz and say short his idea

4. The idea begins to show signs of life

5. To be determined...

 

 

Link to comment
Share on other sites

Hey, I said a long time ago that Fernandez will regret leaving Fairholme, and that Berkowitz will be proven right.  Cheers!

 

Yeah, I still don't know what really went down.

 

Larry Pitkowsky and Keith Trauner left because of Fernandez, right?

 

But did Fernandez leave because of a personal riff between him and Bruce?

 

Or was the whole blowup about BB's lack of portfolio "diversification"?

Link to comment
Share on other sites

Hey, I said a long time ago that Fernandez will regret leaving Fairholme, and that Berkowitz will be proven right.  Cheers!

 

Yeah, I still don't know what really went down.

 

Larry Pitkowsky and Keith Trauner left because of Fernandez, right?

 

But did Fernandez leave because of a personal riff between him and Bruce?

 

Or was the whole blowup about BB's lack of portfolio "diversification"?

 

I think Fernandez felt the ship was going down, and he wasn't the captain.  Either that, or he tripped and fell out of the "Fairholme" boat as it ran aground.  ;D  Cheers!

Link to comment
Share on other sites

  • 9 months later...

St. Joe numbers improving dramatically:

 

4:19 PM St. Joe Company (JOE): Q3 EPS of $0.17 beats by $0.18. Revenue of $55.9M (+109% Y/Y) beats by $28M

 

We may be near a bottom in NW Florida land prices...

 

http://www.4-traders.com/THE-ST-JOE-COMPANY-13183/news/The-St-Joe-Company-Reports-Third-Quarter-2012-Results-15451065/

 

The combination of higher pricing and a greater number of units sold contributed to a revenue increase of 146% in residential real estate sales.
Link to comment
Share on other sites

St. Joe numbers improving dramatically:

 

4:19 PM St. Joe Company (JOE): Q3 EPS of $0.17 beats by $0.18. Revenue of $55.9M (+109% Y/Y) beats by $28M

 

We may be near a bottom in NW Florida land prices...

 

http://www.4-traders.com/THE-ST-JOE-COMPANY-13183/news/The-St-Joe-Company-Reports-Third-Quarter-2012-Results-15451065/

 

The combination of higher pricing and a greater number of units sold contributed to a revenue increase of 146% in residential real estate sales.

 

The numbers are better, but it will take some time.  Much of the positive results are from increasing sales, expense control and little in restructuring charges this year, but the sales increases will be relatively modest until the economy really starts to recover.  I don't know why these guys were shorting this thing in the first place, but I think they'll be proven pretty wrong about JOE long-term.  Good for Bruce...he's having a great year after the annus horriblis.  Cheers!

Link to comment
Share on other sites

Guest rimm_never_sleeps

Hey, I said a long time ago that Fernandez will regret leaving Fairholme, and that Berkowitz will be proven right.  Cheers!

 

Yeah, I still don't know what really went down.

 

Larry Pitkowsky and Keith Trauner left because of Fernandez, right?

 

But did Fernandez leave because of a personal riff between him and Bruce?

 

Or was the whole blowup about BB's lack of portfolio "diversification"?

 

I think Fernandez felt the ship was going down, and he wasn't the captain.  Either that, or he tripped and fell out of the "Fairholme" boat as it ran aground.  ;D  Cheers!

 

we don't know what happened. but the stress must have been unbearable on those two. that was the point of maximum pessimism. if you would have bought fairx that day you would be sitting very pretty.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...