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St. Joe planning Panhandle retirement community

By Mark Basch, Contributing Writer

The St. Joe Co. has been something of a mystery for the past couple of years as new management came in and remained tight-lipped about plans for the company.

However, the only analysts currently covering the real estate development company, Paul Puryear and Buck Horne of Raymond James & Associates, say St. Joe is planning a massive retirement community on land it owns in the Panhandle that could be a really big deal.

“In our view, St. Joe has made impressive progress developing an ambitious new land-use plan that has the scope to surpass any master-planned real estate project ever attempted in the U.S.,” the analysts said in a report as they raised their rating on St. Joe from “market perform” to “outperform.”

St. Joe has filed land-use plans for a 110,500-acre community north of Panama City Beach in Bay and Walton counties that could include up to 170,000 homes, they said.

“The project would take multiple decades to build out in full – vastly exceeding but firmly in the mold of The Villages (outside Ocala),” Puryear and Horne said.

”With The Villages likely completing residential development sometime in 2017, it appears that St. Joe clearly aims to market this community as the new Florida retirement destination of choice for migrating baby boomers,” they said.

St. Joe CEO Park Brady did actually mention the project during the company’s quarterly conference call last month, but didn’t say a lot about it. After reviewing the plans, Puryear and Horne saw what a major development it could be.

“The impact of the sector plan – including a massive active adult community marketed under the ‘WaterSound’ brand name – on St. Joe and the entire Panhandle of Florida will be nothing short of transformational,” they said.

St. Joe moved its headquarters from Jacksonville to the Panhandle town of WaterSound in 2010, but WaterSound isn’t a very big community right now with just 1,400 acres.

St. Joe’s development plan is no sure thing, Puryear and Horne said.

“Unfortunately, trying to project the ultimate success of St. Joe’s plans remains highly speculative, in our view. Not only does the land use plan need to clear several hurdles from county and state commissioners, but it is unproven whether or not St. Joe’s location in a cold-winter part of Florida will attract retirees in any significant numbers,” they said.

“However, if it approaches a level of absorption anywhere near The Villages, the value creation upside is indeed significant – but very hard to pinpoint at this time,” they said.

St. Joe is sitting on a pile of cash – more than $700 million – after selling 380,000 acres of Panhandle timberland and the 4,057-acre RiverTown community in St. Johns County. Not all of that money will be needed for WaterSound.

“Some cash reserves will need to be set aside for future development – but we estimate St. Joe still has hundreds of millions in excess cash,” Puryear and Horne said.

They think the company may use some of that cash to buy back shares of its stock, which will increase the value of its remaining shares outstanding in the market.

After the analysts’ report, St. Joe’s stock, which was listed at $21.59 at the time of the report, reached as high as $23.95 last week, its highest level in three years.

Puryear and Horne set a $25 price target for the stock.

Rayonier sets terms for company split

Rayonier Inc. last week said its plan to split into two separate public companies will be completed by the end of this month, and it also announced terms for the split.

As previously announced, Jacksonville-based Rayonier will spin off its performance fibers business as a new company called Rayonier Advanced Materials Inc. The company’s forest resources and real estate businesses will remain under Rayonier Inc.

Under the terms announced last week, stockholders will receive one share of Rayonier Advanced Materials for every three shares of Rayonier Inc. they currently own. Fractional shares will be paid in cash.

The new shares of Rayonier Advanced Materials will be distributed on June 27 to shareholders of record at the close of business on June 18. Those shares will begin trading on Monday, June 30, on the New York Stock Exchange under the ticker symbol “RYAM.”

Rayonier Inc. shares will continue to trade under its current “RYN” ticker.

Rayonier also announced separate nine-member boards of directors for each company. The Rayonier Inc. board includes former Gov. Jeb Bush, who has been on the board since 2008.

Simon completes its spinoff

Mall operator Simon Property Group Inc. last week completed the spinoff of some its properties, including the Orange Park Mall, into a separate company called Washington Prime Group Inc.

Washington Prime’s shares began trading Thursday on the New York Stock Exchange under the ticker “WPG,” while Simon’s shares continue to trade under the ticker “SPG.”

Indianapolis-based Simon owned all or part of 325 retail properties in North American and Asia but announced plans in December to put 44 of its smaller enclosed malls and 54 strip shopping centers into the spinoff company.

The strip centers put into Washington Prime include the 163,254-square-foot Westland Park Plaza in Orange Park, which is 32 percent owned by Simon Property.

Simon continues to own part of two major Jacksonville properties. It has a 25 percent interest in The Avenues mall and a 50 percent interest in the St. Johns Town Center.

It also owns the St. Augustine Premium Outlets.

According to a Securities and Exchange Commission filing, Washington Prime would have produced revenue of $626.3 million and net income of $128.3 million last year.

Simon reported total revenue of $5.2 billion and net income of $1.3 billion in 2013, including the spinoff properties.

The Washington Prime filing said its enclosed malls were 90.8 percent leased as of Dec. 31 and its strip centers were 94.9 percent leased.

The 959,331-square-foot Orange Park Mall was 99 percent leased, and Westland Park was 96.8 percent leased.

Simon stockholders were issued one share of Washington Prime for every two Simon shares they owned, with fractional shares paid off in cash.

Shoe Carnival earnings disappoint

Shoe Carnival Inc.’s stock fell to its lowest level in two years last week after a disappointing earnings report.

The footwear chain controlled by former Jacksonville Jaguars owner Wayne Weaver reported earnings of 45 cents a share in the first quarter ended May 3, down from 47 cents the previous year and 4 cents lower than the average forecast of analysts, according to Thomson Financial.

Shoe Carnival also forecast second-quarter earnings of 12 cents to 16 cents a share, which includes 5 cents in additional costs to open more stores. Even accounting for those additional costs, the projection was still below the average analysts’ forecast of 27 cents.

Evansville, Ind.-based Shoe Carnival operates 382 stores in 32 states after opening seven new stores and closing one in the first quarter. It plans to open 16 more in the second quarter.

“Second quarter guidance was well below expectations due to increased need for promotional activity and increased pre-opening costs. Macro environment appears to be overwhelming the company,” Sterne, Agee & Leach analyst Sam Poser said in a research note.

Shoe Carnival reported a 1.7 percent decline in comparable-store sales in the first quarter, due in part to weather-related disruptions to customer traffic, which affected all retailers in the winter.

However, the company also is forecasting second-quarter comparable-store sales to be flat to down 3 percent.

Comparable-store sales are sales at stores open for more than one year and are a key indicator of a retailer’s performance.

“We are staying neutral as we do not know if the weakness in traffic/same-store sales is due to the macroeconomic pressures, which is out of management’s hands, or is due to Shoe Carnival losing out to the competition,” Poser said.

Shoe Carnival’s stock fell $2.73 to $18.90 on May 23 after the earnings report and fell as low as $18.04 last week.

Weaver is chairman of Shoe Carnival and its largest shareholder, controlling 24.2 percent of the stock, along with his wife, Delores.

Vistakon business expanding in Russia

Johnson & Johnson’s Jacksonville-based contact lens subsidiary, Vistakon, is making inroads into the Russian market, the company said at an investor conference.

New Jersey-based Johnson & Johnson held the conference with senior leaders of its Medical Devices and Diagnostics segment, which includes Vistakon.

According to a company news release, the conference highlighted Vistakon’s expansion into the Russian market since the 2012 acquisition of a company called Spectrum Vision.

“The acquisition of Spectrum Vision, which is to be fully integrated this year, dramatically increases the company’s market penetration and customer service quality. Today, more than 85 percent of Acuvue brand contact lenses can be delivered the same or the next day across all time zones in Russia,” it said.

Body Central director resigns

Body Central Corp. said in an SEC filing last week that Jennifer Crites Salopek resigned from its board of directors, just three months after she was appointed to fill a vacancy on the board.

Last week’s filing said Salopek resigned “in order to pursue other professional interests” and that it “was not due to any disagreements with the company. “

Salopek has extensive experience with fashion companies, having served as chairman of Charlotte Russe Holdings Inc. and in executive positions with Tommy Hilfiger and Calvin Klein.

Regency adds board member

Jacksonville-based Regency Centers Corp. last week announced that Bryce Blair will join its board of directors on Oct. 1.

Blair is the former CEO of AvalonBay Communities, a publicly traded developer of multifamily apartments. He retired as CEO of AvalonBay at the end of 2011 and retired as chairman of the board in 2013.

mbasch@baileypub.com

(904) 356-2466

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