St. Joe Reports Informal SEC Inquiry of Accounting for Land Impairments

St. Joe Co., the largest private landholder in northern Florida, said it faces an informal inquiry by the U.S. Securities and Exchange Commission over its policies for impairing investment in real estate assets.

The notification by the SEC “does not indicate any allegations of wrongdoing,” and St. Joe will “cooperate fully,” the WaterSound, Florida-based company said today in a regulatory filing made after the close of regular U.S. trading. Its shares fell as much as 11 percent in after-hours trading.

The filing comes three months after David Einhorn, who runs hedge-fund operator Greenlight Capital Inc., said St. Joe failed to properly write down the value of its land after having sold its most valuable waterfront properties. Einhorn was shorting the stock, meaning he bet the share price would decline.

“St. Joe’s valuation practices remain open to question,” Jonathan Doorley, a spokesman for Greenlight Capital, said today. “It is hard to understand how the company invested hundreds of millions of dollars during the real estate bubble and hasn’t seen fit to take a material writedown.”

St. Joe Chief Executive Officer Britt Greene said in November that the land was acquired decades ago, when the company was primarily in the timber business, and needs little revaluation because the cost basis is so low. The company has taken more than $196 million of impairments since 2007, St. Joe Chief Financial Officer William McCalmont said in November.

Falling Land Values

Land values have plummeted in Florida, which has the highest number of home foreclosures after California, according to RealtyTrac Inc., an Irvine, California-based real estate information company.

BlackRock Inc., the world’s largest money manager, today reported its funds owned a 12.6 percent stake in St. Joe, according to a regulatory filing. The company’s largest shareholder is Bruce Berkowitz’s Fairholme Capital Management LLC. Berkowitz was named to St. Joe’s board last month.

St. Joe shares fell to $20.74 as of 6:22 p.m. New York time, and traded as low as $20.60. They have dropped 22 percent in the past 12 months.

To contact the reporter on this story: John Gittelsohn in New York at

To contact the editor responsible for this story: Kara Wetzel at

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