PORT ST. JOE, Fla. (AFX) - The St. Joe Co. rocked the real estate and investment worlds in 1996 when it announced it was quitting the paper business to develop its vast Florida Panhandle land holdings -- an area roughly the size of Delaware.
A decade later, St. Joe is the major player in transforming this stretch of sugary white beaches and turquoise water derided as the 'Redneck Riviera.' But the company, formed by the duPont family 70 years ago and the state's largest private landholder, says it's still in the early stages of its 'place making' plan for the Panhandle.
In St. Joe's latest annual report, CEO Peter Rummell compares the land giant's evolution to his 14-year-old daughter -- giving shareholders a glimpse into how the company views itself as being in the early stages of its long-term growth plan.
St. Joe is unique because it owns so much undeveloped land, roughly 800,000 acres. Since 1996, the company has developed less than 3 percent of its land holdings.
Alfred I. duPont began accumulating the land in the 1920s. His brother-in-law, Ed Ball, continued to acquire land after founding the St. Joe Paper Co. in 1936.
Ball died in 1981, but the company continued manufacturing paper until 1996 when its board decided to sell off its industrial assets and develop its massive land holdings.
'It took this big event in 1996, this new look at the world for us to come to grips with the fact that we had all of this land and we needed to find someone who could tell us what it could be,' said St. Joe Co. spokesman Jerry Ray.
The board brought in Rummell, formerly the Walt Disney Co.'s head of real estate, research and development. He soon announced St. Joe was getting into the 'place making' business.
Ten years later, bulldozers and construction cranes are building beach communities like Compass Point where million-dollar, Nantucket-style cottages are built around winding boardwalks that lead to a breathtakingly wide expanse of beach.
At St. Joe's Water Color resort, pastel cottages surround the picturesque beach town of Sea Side where tourists ride bicycles around a town square and outdoor shopping markets.
The company is even turning non-beachfront properties into high-end resorts. At its inland River Camps on Panama City's West Bay inlet, it is building 400 luxury cabins in the woods. The idea is for people to get back to nature through kayaking, fishing and hiking.
Ray said Rummell and other St. Joe executives came up with the River Camps design while touring the company's inland properties on a 2001 a boat trip.
'They had the sketch book out and were drawing up the plans before the end of the trip,' he said.
St. Joe's long-term vision for the Panhandle appears very different from the concrete condominiums, chain restaurants, strip malls, water parks and putt-putt courses that line Panama City and Destin.
'We are turning this area into a better version of what it wants to be. We wouldn't want to turn it into Las Vegas. Some people have tried to turn South Florida into Las Vegas,' Ray said.
The company's target market is vacation home owners with lots of money -- and it isn't relying solely on Southerners to fill its picturesque coastal enclaves.
St. Joe donated 4,000 acres to relocate the Panama City-Bay County International Airport west of the city where it owns about 78,000 undeveloped acres. The company has named the airport area The West Bay Sector, a region 20 percent larger than Washington D.C.
The new airport, which received preliminary Federal Aviation Administration approval Friday, would be the nation's first since the Sept. 11, 2001, terrorist attacks and its larger runways would accommodate bigger jets, providing easier access to St. Joe Co. properties for buyers and tourists from the Midwest and Northeast.
'That part of Florida is really underdeveloped for the attractiveness of the area and a big part of that is because a big part of the land was held off the market for more than 100 years,' said Todd Vencil, a real-estate analyst for BB&T Capital Markets of Richmond, Va.
Vencil said the actual value of the St. Joe Co.'s assets is difficult for analysts to determine because so much of its worth is tied to its vast land holdings.
'It's stock tends to trade based on people's hopes and fears,' he said.
St. Joe stock has fluctuated from $40 a share to $80 a share since 1996, it is now trading in the low to mid 50s. Hurricanes, spiraling coastal property insurance and a downturn in the overall real estate market have recently devalued the stock.
'The airport, if it happens, will be a good thing for them to develop their acres,' Vencil said.
But the airport plan has drawn the ire of the Natural Resources Defense Council. The nonprofit environmental group lists the region as one of 12 most endangered natural places in America. It sees the airport as the first step toward massive development.
'This is a land deal, this is not about building a new airport because they need a new airport. They are building a new airport to set off everything else that will happen,' said Melanie Shepherdson, a lawyer for the New York-based organization.
St. Joe officials say the airport issue predates their 1996 decision to get into the development business. City leaders had pushed since the early 1990s to expand the airport into St. Andrews Bay, but were rejected by regulators.
'The local airport authority has been trying to address deficiencies at the existing airport for as long as 30 years. This is not a new idea,' Ray said.
Advocates of the new airport say expanding the existing airport would have damaged a more environmentally sensitive area. They also point to hurricane dangers, saying the existing airport closed in hurricanes Opal and Ivan.
Perhaps no place has felt the change of the last decade more than the former paper mill town of Port of St. Joe, where 3.7 miles of U.S. 98 -- the main east to west beach-front corridor through the Panhandle -- was recently rerouted along a new northern road built by the St. Joe Co.
The company donated land to the state and built the new road so that it could turn the old flood-prone section of U.S. 98 into boardwalk, which will eventually provide public beach access to residents of its planned WindMark Beach development.
Construction is under way at the 1,600-lot, high-end vacation home development on the western outskirts of Port St. Joe. The town from which the company took its name was once the center of its industrial empire. But the paper mill that for decades belched sour steam over Florida's 'Forgotten Coast' is no more and the company is busy making new plans for Port St. Joe.
John Hendry, St. Joe's Gulf County representative, is overseeing plans for the region from atop the former headquarters of the Apalachicola Northern Railroad, a one-time St. Joe holding.
Hendry envisions erasing the town's industrial past by creating a pedestrian district, which would revolve around the city's deep-water marina and include a central amphitheater. The three-story former railroad building will be torn down in an effort to link the city's largely blue-collar black and white communities.
He also envisions residential condominiums and commercial developments, saying the city's 5,000 residents need more shopping choices than the one existing Piggly Wiggly grocery store.
But Hendry bristles when he hears 'Wal-Mart,' 'subdivision' and 'gated communities' tossed about, saying all are 'horrible words.'
Although Rummell, compared the company to his daughter in St. Joe's 2005 annual report, 'I'd like to think we are better behaved than a 14-year-old,' said Hendry, a British native who has been with the company for seven years. 'I'd like to think of us as 22 -- still young enough to be creative and take some risks and mature enough to understand our place in the world.'
So what will the St. Joe Co. be like at a metaphorical 40?
'I'd like to see us as almost invisible, as quiet stewards of what we've done. Our role will become proportionally smaller because the pond will become bigger as the region becomes more successful and the choices become greater,' he said.
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