1/ St. Joe Company Q3 '22 Update $JOE keeps firing on all cylinders. The surge in recurring revenue streams from Leasing (+42%) and Hospitality (+30%) more than compensated for the lumpy Home sites sales (-26%), which were impacted by timing of closings. ->Total revs +7% yoy

2/ There's no real estate crisis in the panhandle Demand for homesites continues to be strong and builders purchase $JOE's lots as soon as these are complete.

3/ Homesites Very strong pipeline with over 3.5k homesites platted or under development and 2.4k homesites under contract with builders. Hence it's surprising that ytd only 490 homesites were sold - looking forward to an acceleration here (but think 2k p.a. target is too high).

4/ Hotels In total, 5 hotels with 476 rooms are open. Another 767 rooms are under development, of which I expect 646 rooms to be completed over the coming months. This will increase the number of hotel rooms by 135% and massively boost hospitality revenues.

5/ Commercial - Apts 998 units leased so far. Another 212 ready to lease and 364 units to be completed within the coming months. Also here, a +50% boost to revenue can be expected in 2023.

6/ Commercial - Leasing 1M sqft leased to date. $JOE plans to increase this area by 80% by 2024. Seems like a stretch target, but surging population literally guarantees demand for more CRE. And the catch: $JOE owns all the remaining free land to satisfy these needs.

7/ Cost control $JOE is an operating leverage monster. Probably the only company I know, which can grow at these rates and keep a lid on the corporate costs. Is $JOE the anti- $META ? Corporate and Other OpEx declined from 24% of revs in 2016 to 17% in 2019 and 8.6% 9M 2022.

8/ Buybacks JOE bought back ca. 1% of their shares for $20M, taking advantage of the low share price. Good to see that they re-invest the remainder of the FCF into recurring revenue projects.

9/ Valuation Now comes the tricky part. Given the various businesses, I use a SOTP approach. To identify recurring net income, I deduct all revenues, costs and investments of homesite sales. This leads to almost $50M annualized, growing at >30%. On a 25x multiple that's $1.25B.

10/ Homesites In 2023 they sell prob. >1k homesites. At $130k/lot and a 60% margin, thats roughly another $80M, which grows at least in the high teens. Since this business is lumpier, I give a 20x multiple, leading to another $1.6B.

11/ Latitude Margaritaville In 2023 they sell roughly 500 homes at $420k each. Assuming a 20% developer margin (whereof JOE receives half since it's a JV) plus the 10k per home, JOE nets about $25M. Using a 20x multiple, that's $0.5B.

12/ Other JVs Most other JVs are accounted for in the recurring revenue segment (hotels, multi-family), so I ignore these (currently small) contributors. The parts from above lead to $3.4B (vs. MC of $2.1B), providing good downside protection (also on lower multiples).

13/ Land The elephant in the room are the unused land holdings of JOE (the majority of JOE's revenues (incl. $50M ARR) is generated on 2% of their land). While impossible to value the full land, one can easily imagine a few billions in the medium-to-long-term.

14/ End All-in-all, JOE has a very solid downside protection combined with a massive growth runway - a bet I'm happy to take (long JOE). @hkuppy @Nitorcap, thanks for launching the $JOE discussion back in 2020! Follow me for more company theses and updates.

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