St. Joe (NYSE:JOE) is building a vibrant economic region and sustainable corporate profits with its communities across coastal Walton and Bay counties in Northwest Florida. The company is doing it the right way, with little debt, low fixed expenses, low-cost land, and $300 million of cash for the inevitable surprises of real estate development. Entitled to develop 178,000 homes and 22 million square feet of commercial space over 122,000 acres, St. Joe has a bright future, something its CEO Jorge Gonzalez and I –as the Chairman of both Fairholme and St. Joe – agree on.
There are big forces working in our favor. While Florida enjoys the country’s second fastest growing population, Northwest Florida’s Emerald Coast, where St. Joe owns its land, is growing twice as fast. The area has a new international airport and miles of sandy coast. Tyndall Air Force Base, which is spending $250 million and creating 1,600 new jobs, is but one example of the area’s rapid economic expansion.2 Aviation companies are looking to be nearby, and local campuses for Florida State University and Gulf Coast State College are expanding their engineering programs to meet expected demand. Passenger counts at Northwest Florida Beaches International Airport have nearly tripled to 910,000 since 2010. Planes are at least 80% full. A fourth national carrier will soon offer new direct flights to major cities. Recently, $1.5 billion was committed to boost the regional economy, using settlement funds from the BP oil spill. Even more appealing to prospective re-locators after the recent federal tax changes is Florida’s zero state income tax. St. Joe’s outlook is promising.
From Bruce Berkowitz (Trades, Portfolio)'s Fairholme Fund (Trades, Portfolio) fourth quarter 2017 shareholder letter.
