"I don't know of anybody who controls this much land in an area that also has economic viability," says Peter S. Rummell, the soft-spoken chairman and chief executive officer of St. Joe Co.
How much land is Rummell talking about? Try more than one million acres in Florida alone -- or about 3 percent of the state -- making the Jacksonville-based company Florida's largest private land owner.
And it's not just land that St. Joe has in abundance - it's also loaded with dough, and not afraid to use it. Just how much? Well over $500 million.
"And we have no debt, either at the project or corporate level," says Rummell.
Just what exactly is the St. Joe Company and, for that matter, who is Peter Rummell?
To tell the story of St. Joe, we have to go back in time, back to the early 20th century when the Rockefellers, the Vanderbilts and the DuPonts roamed the lands.
The company was founded by Alfred I. DuPont, the crusty old renegade of the Delaware DuPonts who transferred nearly all of his assets to Florida corporations in the 1920s in a fit of pique to prevent his cousin, Pierre, the newly appointed Delaware Tax Commissioner, from going over his personal finances. Seems Pierre wanted the "rich" to pay more in taxes.
Anyway, shortly after moving to Florida, DuPont entrusted to his brother-in-law, Edward Ball, the task of finding and acquiring suitable investments, which consisted mainly of failing banks and real estate. This Ball did with whimsical abandon for nearly half a century.
In 1933, he purchased about 240,000 acres in four northwestern Florida counties, including most of the town of Port St. Joe. Along with the acreage came a railroad, a phone company, a land development company, a port terminal and a sawmill.
Three years later, in 1936, the St. Joe Paper Co. was formed.
For the next several decades, Ball continued to add to the DuPont holdings, acquiring additional timber land and cardboard box plants throughout the United States and parts of Europe. By the 1970s, St. Joe Paper operated one of the largest paper and pulp mills in the country.
Along the way, Alfred DuPont passed away and the company eventually was placed in the hands of a charitable foundation, the Alfred I. DuPont Testamentary Trust, which still owns about 57 percent of the company's stock.
What emerged over time was a "sleepy" little conglomerate with a lot of assets, but not much in terms of income. Sure, it was profitable but, given its resources, the possibilities were unlimited. The Board of Trustees wanted to tap into that potential.
Enter Peter Rummell.
Rummell was the widely respected chairman of Walt Disney Imagineering, where he oversaw the development of such projects as Euro Disney and Celebration, Disney's planned residential community on the southern edge of Orlando, Fla. He was also a real estate man at heart, a developer with the vision to turn dreams into reality.
Rummell was just the sort of man St. Joe needed to kick the company into overdrive, so in January 1997 they made him an offer he couldn't refuse: a million acres of land, a half a billion dollars, and a charter to go out and make money.
Reinventing the company
His first task was to define exactly what St. Joe was and was not.
"We own railroads, but we don't need to be in the railroad business," says Rummell. "We own a sugar mill, but we don't need to be in the sugar business. We own lots of timber land, but we don't want to be in the timber business. We want to be a real estate company."
Most companies would pick one, or maybe two, segments of real estate and focus on that. Not St. Joe.
"We're going to concentrate on all four legs of real estate: community development and commercial/ industrial on a regional basis -- the Southeast -- and resort and entertainment on a national basis," says Rummell.
Rummell quickly set about to create the structure to do this.
"One of the biggest challenges was to put a management team together," he said. "I've done a lot more through the Rolodex than through head hunters."
Industrial development
| "We own lots of timber land, but we don't want to be
in the timber business. We want to be a real estate company."
-- Peter Rummell, chairman and CEO, St. Joe Co. |
For expanding and relocating companies, though, the commercial/industrial leg is the most intriguing, and is an area in which St. Joe is moving ahead swiftly.
"We are a land company," says David Fitch, senior vice president and general manager of St. Joe's commercial/industrial division.
Last year the company formed a joint venture with the CNL Group Inc. of Orlando to develop office and industrial property throughout Central Florida. Three months later St. Joe moved into the Miami market in a big way by purchasing a 33 percent interest in Codina Group Inc., a South Florida commercial real estate developer.
This summer St. Joe acquired Prudential Florida Realty, the largest real estate brokerage, sales and services company in Florida, and the sixth largest in the United States. The company will remain headquartered in Clearwater, near Tampa.
In addition to buying companies that will put the company in the fast lane of industrial development, the St. Joe Co. has also moved to divest itself of some of "non-core" properties acquired during Edward Ball's heyday.
Late last December, the company reached an agreement with the state and federal government to sell its sugar operations -- which are located in the Everglades of south Florida -- for more than $130 million in cash. "We're taking this conglomerate and cleaning it up," says Rummell.
But St. Joe is not completely divesting itself from all of Ball's legacy. The property along its Florida railroad -- the Gran Central -- that extends from Jacksonville to Miami is now being developed for commercial and industrial use.
"In commercial and industrial development our original 1998 goal was to have 1.5 million square feet of commercial and industrial facilities under development by year's end," said Rummell. "By the end of the second quarter we already had 1.6 million square feet under development [and] a majority of these facilities are on St. Joe or Gran Central land."
In early August, the company broke ground on a planned one million square foot business campus in south Jacksonville.
Among the first tenants will be Bombardier Capital, which announced it will lease a five-story, 125,000 square foot office building on the new campus, which will be located on 38 acres in a Gran Central business park that fronts Interstate 95.
"Gran Central and St. Joe have a wide range of real estate developments in the pipeline throughout Jacksonville, the state and beyond," said Fitch.
Bombardier Capital's lease agreement includes options to expand into a total of 500,000 square feet of office space on the new campus to accommodate future growth in its local business operation. The company is the financial services arm of global transportation and equipment manufacturer Bombardier Inc., which is headquartered in Canada.
Developing
northwest Florida
Most of St. Joe's property, however, is in the panhandle of northwest Florida. There the company plans to develop several residential communities.
Among them is the community of Seagrove, located west of Panama City in Walton County. Remember Rummell's key role in Celebration, Disney's residential community outside of Orlando? Well, Seagrove will be a mixed-use community without the "Disneyesque character on a movie set" feel.
| St. Joe's goal is to have between 1.5 and 2 million square feet of commercial and industrial facilities under development each year. |
The challenge of building communities in northwest Florida does not escape Rummell.
"There are major infrastructure issues," says Rummell. "One is the lack of full-service medical facilities. Another is a major regional airport on the model of Fort Meyers."
But what St. Joe is trying to do is to provide not just places to live, but also places to work, and that's really where the appeal to economic developers comes in. For these communities to really work, Rummell needs to use some of his land for industrial development -- and that's exactly what he proposes to do.
"We're in the process of planning for the development of one million acres, some in the near-term, some long-range," says Rummell. "It's not just a matter of putting up some signs and saying everything's for sale."
When Rummell talks about development, he's not just talking about up-scale residential development or retirement communities.
"There's a crying need for affordable housing in Walton County for service workers," he says. "If we can fill that need with multi-family housing, as well as cater to the upscale market, that's what we're going to do."
The Dallas-D.C.-Miami Triangle
| "Our strategy is more qualitative rather than
quantitative. We are building a mix of uses:
high density distribution facilities,
telecom-rich, high-density parking call centers,
projects like that."
-- David Fitch, senior vice president and general manager
for commercial/industrial development, St. Joe Co. |
Having extended its reach to most of Florida's major cities, St. Joe is focusing on a much larger market: the fast-growing U.S. Southeast. It is in the process of acquiring Goodman-Segar GVA, a major real estate developer with major offices in Atlanta, Ga.; Raleigh and Durham, N.C.; Hampton Roads, Richmond, Norfolk and Tysons Corner, Va.; and Washington, D.C.
"Goodman Segar is part of a strategy of diversifying our platforms of operations," according to Fitch.
In addition, St. Joe has cast its eyes westward and is in the process of acquiring Means-Knaus, LLC, which has major holdings in Dallas and Houston.
With these moves, St. Joe intends to take its formula and go regional.
"From a macro point of view, we're in business in the Southeast," says Fitch. "Most corporations are organized regionally."
With St. Joe's expanded presence throughout the Southeast, the company figures to be amajor player in economic development.
"Our strategy is more qualitative rather than quantitative," says Fitch. "We are building a mix of uses: high density distribution facilities, telecom-rich, high density parking call centers, projects like that."
What will the future bring?
"We're pretty evenly balanced between commercial development and office and industrial," said Fitch. "We have over two million square feet in development in office. Our goal is to be at 1.5 to 2 million square feet in development each year."
Still, there's no question that St. Joe is positioning itself for the long haul.
"Your goal shouldn't be to maximize the first dollar out," says Rummell. "It's a huge long-term opportunity."
So what kind of company does he think St. Joe will be 10 years from now?
"It's hard to say," he replied. "We're growing the four segments equally in an opportunistic way. Ultimately, one will charge ahead, probably through an acquisition."
And will the St. Joe Co. be a household name 10 years from now?
"St. Joe may well end up in the 'Proctor & Gamble' model, where the products are better known than the company itself," says Rummell. "It's not a headline grabbing answer, but it's a true picture of where we are."
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