JOE Im looking at this company in two ways 1. A detailed asset analysis gets me to a value of $15-$16.

I dont give much value to the West Bay mixed use assets so you get a cheap option on the ability of the company to monetize these. How much that option is worth is tough to judge, but if they monetize that area well it could be worth $5/share at todays housing prices. The company is in somewhat of a homeostasis as they figure out what to do there. 2. From a higher level, shares should continue to trade with the Florida real estate market, resort operations, timber operations, etc. These are all improving. Home inventory in Tampa is quite low and sales continue to outpace oncoming supply. Additionally, I think if investors gain confidence in the companys increased focus on ROIC money will flow into the name. The company is essentially cash flow break-even excluding rural land sales. CapEx/corporate expenses have been cut dramatically. Future CapEx is opportunistic and focused on Breakfast Point. Just for perspective, the company has traded between $2-5k/acre post crisis. At $20 it trades at $3k/acre. Putting this together, I would be a buyer closer to $17-$18. At that price youre not paying a ton for housing appreciation and optionality around the West bay/airport. That also values the entire company at about $2.6k/acre. Id be a seller $23-$25 as Im not optimistic on a sustained housing recovery.

Asset Analysis Below is an asset analysis. The upside scenario assumes the Tampa bay case-shiller increases 10%. Just to give one an idea of the sensitivity, if housing prices increased 20% the upside scenario increases to $36/share.

Downside Residential Clubs/Resorts Rural Commercial West Bay Lands Total EV :Sub Debt :Add cash Equity Value Value/Share $106,387.2 $45,000.0 $835,741.7 $116,618.7 $24,605.8 $1,128,353.4 $51,700.0 $169,000.0 $1,245,653.4 $13.5

Base $141,674.2 $45,000.0 $884,476.2 $174,928.1 $49,244.2 $1,295,322.7 $51,700.0 $169,000.0 $1,412,622.7 $15.3

Upside $234,044.3 $45,000.0 $943,579.4 $233,237.5 $270,000.0 $1,725,861.2 $51,700.0 $169,000.0 $1,843,161.2 $19.9

Upside w/cs+ 20% $484,172.1 $45,000.0 $943,579.4 $233,237.5 $1,500,000.0 $3,205,988.9 $51,700.0 $169,000.0 $3,323,288.9 $35.9

Residential JOE has many developments that are both inland and coastal. The coastal communities are their Resort properties that experience more volatile price swings and are mostly developed. They are continuing to develop in some of these areas opportunistically, but their capital is now being spent on primary communities, most notably Breakfast Point and to some extent RiverTown.
Residential Developed Projects County Bay Bay Gulf Leon Franklin St. Johns Walton Walton Walton Walton Other Total lot value Average Price/lot Implied Value/Acre Residential Lots in-development Total lot value Average Price/lot Implied Value/Acre Total residential Total lot value Average Price/lot Implied Value/Acre $106,387.2 $7.4 $7.7 $141,674.2 $9.8 $10.3 $234,044.3 $16.2 $16.9 $23,695.0 $1.6 $2.0 $39,120.5 $2.7 $3.3 $103,509.2 $7.2 $8.7 Project Breakfast Point Phase 1 RiverCamps WindMark Beach SouthWood SummerCamp Beach Rivertown WaterColor WaterSound WaterSound Beach WaterSound West Beach
-10.00%

Tampa case-shiller scenerios

0.00% 10.00%

$3,408.6 $14,394.0 $9,329.4 $3,591.8 $9,229.5 $4,947.9 $13,994.2 $7,363.6 $7,197.0 $8,996.3 $239.9 $82,692.2 $63.7 $43.6

$4,227.3 $17,851.2 $11,570.2 $4,454.5 $11,446.3 $6,136.4 $17,355.4 $9,132.2 $8,925.6 $11,157.0 $297.5 $102,553.7 $79.0 $54.0

$5,380.7 $22,721.9 $14,727.2 $5,670.0 $14,569.4 $7,810.7 $22,090.7 $11,623.9 $11,360.9 $14,201.2 $378.7 $130,535.2 $100.6 $68.7

Operating Resorts These are revenues from rental programs (primarily at the WaterColor/WaterSound properties), golf clubs, marina operations, etc. To value this segment I just used other leisure comps I found in the

public markets. I tried to find ones with similar operating structures that were not/barely profitable. Please see table below.

Lodging/Leisure Comps Red Lion Marriott Average JOE Resorts

EV/LTM Sales 1.3x 1.2x 1.3x 1.3x

Value

$45,000.0

Rural Land The majority of JOEs land is rural/timberland. To value this I looked at historical transactions as well as current listings for similar properties. JOE transactions are listed below.
Avg (2000-2012) Acres Sold ASP Total Acerage Value/Acre Total Value $1.64 539,188 $1.64 $884,476.2 Q2 2012 12 $16.2 Q1 2012 2,855 $1.5 2012 2,867 $1.6 2011 259 $13.4 2010 606 $4.9 2000-2009 426,780 $1.6

For the 2000-2009 period I threw out the boom years (2004,2005,2006). Excluding those years the average is $1.64k/acre. I also looked at recent listings which suggest a price closer to $1.7k/acre. See below.
For Sale Land Class Timber Both Light Timber Recreation Both Timber Both Both Total Location Gasden County Madison Jefferson Madison Lafayette Hamilton Baker Jackson Acres 823 3,685 4,481 1,059 1,610 1,050 2,410 952 16,070 Price $2,304.0 $7,400.0 $5,601.3 $1,650.0 $2,500.0 $1,530.0 $4,338.0 $2,097.0 $27,420.3 Price/Acre $2.8 $2.0 $1.3 $1.6 $1.6 $1.5 $1.8 $2.2 $1.7

Assuming final sales are done at a discount to list price this probably supports a value of $1.65k/acre as well. Commercial Real Estate/Mixed Use Projects in Bay County The company owns approximately 900 acres of entitled commercial real estate. The majority is located in Bay County surrounding the new airport. The company also has over 4,000 acres of mixed use land in pre-development that it donated to the airport. Furthermore, there is about 15,000 acres of mixed use in-development lands in Bay County as well. There is tremendous optionality to these lands because of their proximity to the airport and their ability to be used for both residential/commercial

applications. Below is a depiction of traffic activity at the airport. Volumes are showing a positive, albeit slowing trend.
2010 Monthly Passengers % change YTD Passengers % change 648363 869389
34.09%

2011

May-12 87.4
4.64%

Jun-12 95.6
14.30%

Jul-12 94.2
7.55%

Aug-12 82
4.85%

354.7
2.77%

450
5.00%

544
5.45%

626.5
5.37%

Valuing this acreage is quite difficult and is why I prefer to think of it as an option and buy the stock when the implied value of this acreage is close to rural land value ($1.65k/acre). That is about $14, where coincidentally, the stock bottomed. In an attempt to nail down a current value I looked at recent sales in the commercial lands. They have averaged about $263k/acre over the past four years. See below.
Avg (2008-2012) Acres Price/Acre Total Acerage Value/Acre Total Value $263.0 887 $197.23 $174,928.1 Q2 2012 18 $343.0 Q1 2012 3 $187.0 2012 21 $318.2 2011 6 $319.5 2010 18 $237.0 2009 29 $227.0

Obviously, it is very hard to predict what they could sell all the acreage for so I applied the following discounts for various scenarios.
Commercial Assumption Total Value Value per acre Downside 50% Discount $116,618.7 $131.5 Base 25% Discount $174,928.1 $197.2 Upside No Discount $233,237.48 $263.0

To value the remaining 15,000 acres I used Breakfast Point as comp to develop an upside scenario. The base case assumes a value equal to JOEs other in-development residential lots. Downside case assumes rural land value/acre.
West Bay Assumption Total Value Value/Acre Downside Rural Value $24,605.8 $1.6 Base Other Res Lots In Dev $48,326.2 $3.2 Upside Bfast Point $270,000.0 $18.0

High level Analysis If one looks at a MVA of JOEs stock price it is pretty well correlated to the Tampa case-shiller. Tampa was hit hard by the crisis and now has a much healthier housing market. Inventories are very low, purchases are outpacing new supply and distressed homes are declining relative to the overall market. See the table below.

1 month ago Inventory % distressed New Listings Sold/Expired 2,311

18.00%

6 months ago 6,065

20.00%

1 year ago 6,871

31.00%

2 years ago 9,406

34.00%

951 1,365

1,141 1,357

930 1,200

Another way to look at the company is on an EV/acre basis. In 2005 that traded as high as $8k/acre and last year that reached a low of $1.9k/acre. Today it is about $3k/acre. $2-$3k/acre looks like an optimal entry point in this regard. See below.
2002 High EV/Acre Low EV/Acre Avg EV/Acre 2003 $3.8 $2.7 $3.3 2004 $5.9 $4.1 $5.0 2005 $7.9 $5.9 $6.9 2006 $6.5 $4.3 $5.4 2007 $6.7 $3.3 $5.0 2008 $6.2 $3.0 $4.6 2009 $5.1 $2.2 $3.7 2010 $5.7 $2.5 $4.1 2011 $4.3 $1.9 $3.1 As of 10/8 ($19.8) $3.0 $3.0 $3.0