Business

Saturday, Nov. 07, 2009

Thinking big

St. Joe Co. weathers recession by thinking big

AP Photo FLPLA202, FLPLA201

By MELISSA NELSON

Associated Press Writer

SANTA ROSA BEACH, Fla. (AP) -- Building along the Florida Panhandle's picturesque seaside slowed when financing dried up and the economy soured. Fences with architects' renderings of developments hide the unfinished eyesores dotting the beaches.

But the St. Joe Co.'s construction cranes and earth movers never stopped and its high-end vacation retreats and shopping centers are being built along with taxpayer-funded roads and an international airport, the nation's first since the 2001 terrorist attacks. Southwest Airlines recently agreed to service the airport, an announcement St. Joe CEO Britton Greene touted as a milestone in the company's 80-year history.

"This changes the dynamics of what we have as a land company," he said, standing in an unfinished terminal beneath a sign with the May 18 targeted opening.

Rooted in the Great Depression, St. Joe Co. was founded by a DuPont chemical heir who bought a wide swath of the Panhandle for pennies an acre.

Today, St. Joe is pushing a massive plan to transform into an international destination this region long known as the "Redneck Riviera" for its cheap motels, kitschy tourist attractions and appeal among Southern tourists. The strategy's lynchpin: The new Northwest Florida-Panama City International Airport on 4,000 acres west of Panama City donated by the company.

St. Joe's stock price jumped 6 percent to $28.63 a share the afternoon of Oct. 21 when Greene announced the agreement with Dallas-based Southwest to offer eight daily flights out of the airport. The destinations of the Southwest flights haven't been determined. On Monday, the company's stock was trading around $24 a share.

Under an agreement between the company and the airline, St. Joe will cover fuel costs if Southwest fails to break even on ticket purchases during the first three years. The company and the airport will pay up to $14 million the first year and $12 million the second year.

St. Joe Co. operated as a timber and paper manufacturer until 1996 when it got out of those businesses and turned to land development. It hired Peter Rummell, the former head of real estate for Walt Disney Co., and started selling off sections of it's then nearly 1 million acres, which had made it Florida's largest private landowner for decades.

Greene, the company's former chief operating officer, replaced Rummell as CEO in 2008.

The company today owns about 590,000 acres -- including 72,000 acres surrounding the new airport -- and is Florida's No. 2 private landowner behind Seattle-based Plum Creek Timber Co.