Fairholme takes a bigger chunk of St. Joe

AP News
Posted: Sep 16, 2011 10:18 AM
Fairholme takes a bigger chunk of St. Joe

Fairholme Capital is boosting its stake in the Florida real estate developer St. Joe six months after its founder was named chairman of the board. The deeper commitment sent the company's stock surging more than 8 percent Friday.

Fairholme, based in Miami, tightened its grip on the developer after broader losses were reported last month for the second quarter.

St. Joe Co. disclosed in a regulatory filing that it entered a stockholder deal with its biggest shareholder, Fairholme Funds Inc., and Fairholme Capital, that will allow it to boost its ownership stake to up to 50 percent. Fairholme had previously been approved for only a 30 percent stake.

St. Joe's was rattled by the housing collapse and was forced to seek new capital, especially after the Gulf of Mexico oil spill last summer that cut travel to the region.

Just two years ago, the real estate company brokered a deal that brought Southwest Airlines Co. to the Northwest Florida Beaches International Airport, which is surrounded by 72,000 acres of surrounding pine and swampy forests that St. Joe envisioned as a bustling tourism and aerospace corridor.

The airport opened in May 2010, just before the nation's worst oil spill. Travel to the airport dipped.

As part of the deal to land Southwest near its planned future developments, St. Joe said it pay the airline's fuel costs if it failed to break even on ticket purchases during the first three years. The developer's stock jumped 6 percent when the deal was announced, and continued to rise despite Florida's slumping economy.

In February, St. Joe's CEO was ousted, along with three directors, and the founder of Fairholme Capital Management LLC, Bruce Berkowitz, stepped in as chairman in March.

Shares of St. Joe, based in Jacksonville, Fla., rose $1.44 to $18.52 Friday morning. Over the past year, the stock has traded in a range of $14.80 to $30.34. Shares were trading closer to $60 before the housing collapse.