St. Joe (JOE) Acquires Panama City Beach Office Buildings

The St. Joe Company (NYSE:JOE) recently announced the acquisition of the Panama City Beach office buildings. The move reflects the company’s diligent efforts to diversify its business and capitalize on growth potentials in the Panama City Beach and Bay County region.

Specifically, the company acquired the Beckrich I and Beckrich II office buildings, which are situated at the intersection of Richard Jackson Boulevard and U.S. 98 in Panama City Beach, FL. These properties are likely to experience solid demand for space, given that they are placed in a flourishing community with restaurants, shopping, schools, healthcare facilities and growing residential communities, like Breakfast Point, in the vicinity.

The two, 2-story Class A office buildings are located on around 5.5 acres. They total more than 67,000 net leasable square feet, with 278 parking spaces. Further, the buildings can accommodate a vast category of users, with space available for lease ranging from 1,000 square feet to over 11,000 square feet.

However, shares of St. Joe underperformed the Zacks categorized Real Estate Development industry in the past three months. St Joe’s shares descended 2.5% over this time frame, while the industry climbed 5.7%.



Notably, volatile sales revenues witnessed by a number of segments at the company are a major concern. In fact, St. Joe’s forestry operations have historically been a significant contributor to the company’s income. This segment generated a steady flow of revenues. However, following the AgReserves sale in 2014, income from forestry operations has reduced, leading to inconsistency in the company’s period-to-period operational results and cash flows.

In addition, in the residential real estate business, customer mix has shifted from retail sales which enjoy a more stable revenue flow, to sales to homebuilders. However, homebuilders have a propensity for irregular, bulk purchases, adding to the volatility of the company’s top line.

Nevertheless, St. Joe is making concerted efforts to enhance its resorts, leisure business and leasing operations. In fact, given the volatility in revenues from real estate and timber lines in the past quarters, the company’s resorts, leisure and leasing segments cushioned its performance. We believe that such efforts would boost its overall profitability, moving ahead.

Currently, St. Joe has a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked stocks in the Real estate industry include CBRE Group, Inc. (NYSE:CBG) , Colliers International Group Inc. (TO:CIGI) and Consolidated-Tomoka Land Co. (NYSE:CTO) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CBRE Group currently has a long-term expected growth rate of 12.5%, while Colliers International Group has a projected growth rate of 15.0%. Consolidated-Tomoka Land Co.’s estimates for 2017 moved up 1.0% to $2.90 over the past 60 days.

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St. Joe Company (The) (JOE): Free Stock Analysis Report

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