FAQs

Question # 1: Most of JOE’s land is in Northwest Florida. What’s it like there?
Question # 2: Why is the amount of land JOE owns within proximity to the coast important?
Question # 3: How is JOE working to increase the value of its land?
Question # 4: How is JOE’s entitlement pipeline an indication of value?
Question # 5: Does JOE own a significant amount of wetlands and do they have much value or development potential?
Question # 6: What are the population demographics of Florida?
Question # 7: What is the status of the relocation of the Panama City airport, and how is the new airport likely to impact economic growth in the region?
Question # 8: Most investors view JOE as a long-term holding. What is management doing to accelerate value creation and return on investment?

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Question # 1: Most of JOE’s land is in Northwest Florida. What’s it like there?

Answer: Northwest Florida’s beaches are the state’s second most popular tourist destination, behind only Orlando. They draw seven million visitors each year, more than any other stretch of beach in the eastern United States. (1)

Beaches in Northwest Florida have been rated as some of the most beautiful in the nation and the world. Beaches in Walton, Bay and Gulf Counties have been awarded the number one ranking by Dr. Stephen P. Leatherman, an authority on beach quality and author of America's Best Beaches. (2)

According to a study conducted by the University of Florida’s Bureau of Economic and Business Research, for most of the state’s history the strong growth rates in Southeast and Southwest regions of the state pulled the center of Florida’s population steadily south. But since 1980, this trend has stabilized as growth in the northern part of the state, from Jacksonville in Northeast Florida to Pensacola in Northwest Florida, became more balanced than in the past. (3)

Northwest Florida enjoys a very favorable climate, with mild winters, sunshine and clear days. Northwest Florida is located in U.S. Climate Zone 8, the same climate zone as exclusive and highly successful resort/residential areas such as Hilton Head (SC), Amelia Island (FL), Kiawah Island (SC) and St. Simons and Sea Island (GA). (4)

Florida’s beauty and diversity is legendary. Northwest Florida has a distinct geography, culture and cuisine that is very different from Miami or Orlando. JOE is working to make its part of Northwest Florida even better.

(1) Visit Florida, www.visitflorida.org

(2) See www.drbeach.org

(3) Florida Population Growth: Past, Present and Future, dated June 2005, by Stanley K. Smith, Bureau of Economic and Business Research, University of Florida, Appendix Table 3
(4) United States Department of Agriculture, Climate Zones, 1990.

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Question # 2: Why is the amount of land JOE owns within proximity to the coast important?

Answer: Historically, demand has been strongest for Florida locations in close proximity to the coast. JOE owns more than 425,000 acres within 15 miles of the coast of the Gulf of Mexico – and a significant percentage of the remaining coastal land suitable for development. (5)

This coastal zone is the part of Florida where most people want to live. Approximately 80 percent of Florida’s population lives within ten miles of the coast. Within this coastal zone, land is in demand for a wide variety of uses, including resort residential, primary residential, commercial, office parks, light industrial and other uses.

JOE owns a significant percentage of the remaining land within Florida’s coastal zone that is suitable for development. A large percentage of the land not owned by JOE within Florida’s coastal zone is either already developed or unsuitable for development.

(5) National Wetlands Inventory, Florida Department of Transportation, Florida Natural Area Inventory, ESRI, Florida Trend, Rosen Consulting, U.S. Census Bureau

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Question # 3: How is JOE working to increase the value of its land?

Answer: JOE’s value creation strategy is based on moving land to its highest and best use. Simply put, that means understanding the unique characteristics and potential of each acre of land, creating a plan for the company’s land holdings and then taking the necessary steps to move each acre towards its highest potential value.

JOE is continually working to create value across its land holdings through entitlements, infrastructure and economic development. Over the previous decade, JOE has made tremendous progress in each of these areas.

Entitlements – Eleven years ago, JOE had timberland limited primarily to agricultural-type uses. Eleven years later, as of September 30, 2008, JOE had an entitlements pipeline of approximately 45,600 residential units, approximately 14.4 million square feet of commercial space and an additional 592 acres zoned for commercial. These entitlements provide JOE with a range of options to convert them into value.

Infrastructure – JOE has been actively working with federal, state and local governments to improve infrastructure and access to its land holdings. Projects such as the relocation of the Panama City airport and the relocation of U.S. Highway 98 in Gulf County can create tremendous value. Other significant road projects that are in planning or underway are expected to increase access to JOE’s land and open many new value creation opportunities. For example, in 2006 JOE sold the State of Florida 4,000 acres to be used for rights-of-way for future road and highway construction in the region.

Economic Development – Economic development tools come in a variety of forms, but all are designed to increase the absorption of real estate in a given area. The new airport in Bay County is expected to be a significant inducer of economic activity, new jobs and value creation. We believe the new Sacred Heart hospital, under construction in Port St. Joe, will be an inducer for real estate in Gulf County, as was the Sacred Heart hospital in Walton County. We also believe that strategic alliances with strong brands like Orvis, Galati Yacht Sales, Southern Progress Corporation (publisher of Southern Accents and Coastal Living) and the National Audubon Society introduce the region and JOE products to potential customers. Destination retail, like Pier Park in Panama City Beach, which creates a shopping destination as well as thousands of jobs, is another form of accelerator.

JOE is executing comprehensive land-development strategies and creating livable communities across Northwest Florida in an effort to maximize the value of JOE land and accelerate absorption. As a result of JOE’s planning strengths, we believe the potential highest and best use of strategically located JOE land is increasing.

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Question # 4: How is JOE’s entitlement pipeline an indication of value?

Answer: Without land-use entitlements, most development is not possible. Therefore, obtaining land-use entitlements is one of the surest methods for increasing the value of JOE land by moving it to a higher and better use.

In Florida, it is becoming increasingly complicated and expensive to obtain land-use entitlements, constricting the supply of developable land. JOE’s expertise in securing entitlements is a competitive advantage, and its entitlements pipeline is an important indication of future value.

JOE’s low basis land and entitlements pipeline together provide a ready supply of developable land that allows JOE to react to changing market conditions more quickly and efficiently than most competitors.

This unique entitlements expertise, coupled with our low-basis land, is a further competitive advantage. Many competitors must spend significant time and resources to purchase land and gain land use entitlements to be in a position to compete with JOE.

Gaining land use entitlements may become more difficult in the future, further constricting the supply of developable land.

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Question # 5: Does JOE own a significant amount of wetlands and do they have much value or development potential?

Answer: JOE does own a significant amount of wetlands. While much of the wetlands may not be developable, they are very valuable and essential to the development process.

First, with proper planning, wetlands create highly valued views, vistas and natural amenities for development projects. For example, home sites with views of coastal dune lakes and marshes at WaterColor and WaterSound Beach are more highly valued than interior lots without views.

Second, wetlands are very often necessary for mitigation for development projects. If a developer doesn’t have a “mitigation bank” of wetlands, they are often required to purchase and protect them in order for a project to proceed. Because it owns a significant amount of wetlands, JOE has lands readily available for mitigation required by regulators. This is a significant competitive advantage.

JOE is highly skilled at creating master plans for its communities that embrace wetlands as amenities while preserving their environmental integrity.

For example, WaterColor’s 499 acres include approximately 135 acres of wetland preserves that were incorporated into the community master plan. Miles of nature trails made these areas an integral part of this resort community. These natural areas are home to several thriving endangered species. Even the resort’s storm water systems have been designed to become natural areas and buffers.

WaterColor received numerous accolades for its master-plan design and environmental stewardship, and these features distinguish WaterColor in the marketplace.

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Question # 6: What are the population demographics of Florida?

Answer: Florida has the 4th highest state population in the United States. As of 2007, Florida’s estimated population was 18,250,000, up from 15,900,000 in 2000. Baby Boomers, born between 1946 and 1964, made up about 23 percent of Florida’s 15.9 million population in 2000. In 2010 the U.S. Census Bureau expects that Baby Boomers will account for 27 percent of the nearly 20 million people expected to be living in Florida. (6)

Although Florida’s growth rate has declined in recent years, Florida’s population is expected to return to growth levels of about 317,000 per year between 2010 and 2020 according to estimates by the University of Florida’s Bureau of Economic and Business Research. Those levels are similar to growth in the 1980s and 1990s. (7)

In August 2008 Dr. Stanley Smith, Director of the University of Florida’s Bureau of Economic and Business Research, told reporters that according to his research, Baby Boomers are expected to descend on Florida in even larger numbers between 2010 and 2020, and will increase their standing as the state’s largest age group. According to Smith, this is due to the fact that this group is nearing retirement age, the state’s housing prices have become more affordable and Florida’s tropical climate remains a draw. (8)

Florida has shown long-term resilience and has worked through downturns over the past seven decades, but Florida has remained one of the fastest growing states in the country for each of those seven decades.

(6) – U.S. Census Bureau

(7) – University of Florida News, “Economy slows population growth to lowest level in 30 years,” March 27, 2008

(8) – Florida Sun-Sentinel, “New wave of baby boomers ready to descend on Florida,” August 4, 2008

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Question # 7: What is the status of the relocation of the Panama City airport, and how is the new airport likely to impact economic growth in the region?

Answer: According to the Airport Authority, construction of the new airport is currently underway and on schedule to be completed in May 2010. A web site, www.newpcairport.com, has been created by the Airport Authority to provide updates on the new airport construction project.

In late October 2008, the U.S. District Court for the Middle District of Florida, Jacksonville Division (Court), issued a final order denying an attempt to halt construction of the new airport. There is a 60-day appeal period.

The Court dismissed with prejudice the claims brought by the Florida Clean Water Network, National Resource Defense Council and Defenders of Wildlife pertaining to the Clean Water Act Section 404 permit. The Plaintiffs brought the action against the United States Fish and Wildlife Service and the United States Army Corp of Engineers under the National Environmental Policy Act of 1969 (NEPA). JOE was an intervener in the case.

There is currently one other legal challenge pending to the relocation project. A challenge to the Federal Aviation Administration’s Record of Decision recommending and approving the relocation of the airport is pending in the U.S. Court of Appeals for the 2nd Circuit. This challenge is not currently impacting on-going construction at the airport.

In terms of economic development potential, Dr. Hank Fishkind, one of Florida’s leading economists, believes a new Panama City airport is very likely to become a strong economic development engine for the region. (9)

Throughout history airports have had an impressive track record of accelerating economic development activity. The new Panama City airport will be the first one built in almost 15 years. As a large-scale greenfield airport site, it provides unique opportunities and unmatched flexibility for companies dependent on aviation and logistics infrastructure.

There are strong analogs for the development of this airport in Huntsville, AL, Savannah, GA, Jacksonville, FL, Fort Myers, FL and Northwest Arkansas. All of these airports have recently seen significant adjacent development. According to Dr. Fishkind’s research, the opening of the new Southwest Regional Airport in the Ft. Myers/Naples area had a tremendous impact on real estate values. Fishkind found that since the opening of the airport in 1983, the aggregate residential real estate values have increased an average of 11 percent per year in the region. (10)

(9) See www.fishkind.com.

(10) Comparative Market Study of Ft. Myers and The Emerald Coast, Fishkind & Associates, U.S. Census Bureau, March 2007.

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Question # 8: Most investors view JOE as a long-term holding. What is management doing to accelerate value creation and return on investment?

Answer: In October 2007 JOE announced a restructuring designed to significantly accelerate its value creation process in Northwest Florida. The restructured JOE is designed to increase its financial flexibility and strengthen its balance sheet.

As part of the restructuring, JOE raised significant capital in a successful public equity offering in early 2008 and used the $580 million of net proceeds from the offering to repay substantially all of JOE’s outstanding indebtedness. The company also eliminated its current dividend. Ongoing efforts to improve financial performance include:

Significantly reducing capital expenditures;
Meaningfully decreasing selling, general and administrative expenses; and
Divesting non-core assets.

Going forward, the company intends to limit its capital investments by shifting more development to a range of best-of-class strategic business partners that include branded builders, project developers, venture partners, alliances and key long-term customers. JOE announced it intended to limit capital investment for horizontal developments to the company’s most strategic and valuable places. JOE believes this approach will accelerate its land sales and development.

As a result of the restructuring, JOE announced that it was evolving from an “end-to-end” developer to Northwest Florida’s primary supplier of entitled land and development partner.

Now JOE is working to accelerate value creation by becoming a master developer for the region and entering into a wide range of strategic alliances to move projects faster. While JOE has slowed its capital deployment to match the market, its low-basis land and entitlement competency provide significant flexibility.

In addition to accelerating projects, working with strategic alliances will allow JOE to leverage other organizations’ capital, expertise and brand strength, as well as to limit the financial risks associated with any specific project.

JOE is also working with local, regional and state officials and organizations to stimulate economic development in Northwest Florida, which in turn drives demand for land for commercial, residential, and resort residential development.

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Forward-Looking Statements
We have made forward-looking statements in these FAQs pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements in these FAQs that are not historical facts are forward-looking statements. You can find many of these forward-looking statements by looking for words such as “intend”, “anticipate”, “believe”, “estimate”, “expect”, “plan”, “should”, “forecast” or similar expressions. In particular, forward-looking statements include, among others, statements about the following:

future operating performance, revenues, earnings, cash flows, and short and long-term revenue and earnings growth rates;
future residential and commercial entitlements;
expected development timetables and projected timing for sales or closings of housing units or home sites in a community;
development approvals and the ability to obtain such approvals, including possible legal challenges;
the anticipated price ranges of developments;
the number of units or commercial square footage that can be supported upon full build out of a development;
the number, price and timing of anticipated land sales or acquisitions;
estimated land holdings for a particular use within a specific time frame;
absorption rates and expected gains on land and home site sales;
the levels of resale inventory in our developments and the regions in which they are located;
the development of relationships with strategic partners, including homebuilders;
the pace at which we release new products for sale;
comparisons to historical projects;
the amount of dividends, if any, we pay; and
the number or dollar amount of shares of company stock which may be purchased under our existing or future share-repurchase programs.

Forward-looking statements are not guarantees of future performance. You are cautioned not to place undue reliance on any of these forward-looking statements. These statements are made as of the date hereof based on our current expectations, and we undertake no obligation to update the information contained in these FAQs. New information, future events or risks may cause the forward-looking events we discuss in these FAQs not to occur.

Forward-looking statements are subject to numerous assumptions, risks and uncertainties. Factors that could cause actual results to differ materially from those contemplated by a forward-looking statement include the risk factors described in our annual report on Form 10-K for the year ended December 31, 2007 and our quarterly reports on Form 10-Q, as well as, among others, the following:

a continued downturn in the real estate markets in Florida and across the nation;
a continued crisis in the national financial markets and the financial services and banking industries;
a continued decline in national economic conditions
economic conditions, particularly in Northwest Florida, Florida as a whole and key areas of the southeastern United States that serve as feeder markets to our Northwest Florida operations;
the lack of available mortgage financing, increases in foreclosures and changes in interest rates;
changes in the demographics affecting projected population growth in Florida, including the demographic migration of Baby Boomers;
the inability to raise sufficient cash to enhance and maintain our operations and to develop our real estate holdings;
an event of default under our credit facility or the restructuring of such debt on terms less favorable to us;
possible future write-downs to the book value of our real estate assets;
the termination of sales contracts or letters of intent due to, among other factors, the failure of one or more closing conditions or market changes;
a failure to attract homebuilding customers for our developments, or their failure to satisfy their purchase commitments;
the failure to attract desirable strategic partners, complete agreements with strategic partners and/or manage relationships with strategic partners going forward;
natural disasters, including hurricanes and other severe weather conditions, and the impact on current and future demand for our products in Florida;
whether our developments receive all land-use entitlements or other permits necessary for development and/or full build-out or are subject to legal challenge;
local conditions such as the supply of homes and home sites and residential or resort properties or a change in the demand for real estate in an area;
timing and costs associated with property developments;
the pace of commercial development in Northwest Florida;
competition from other real estate developers;
changes in pricing of our products and changes in the related profit margins;
changes in operating costs, including real estate taxes and the cost of construction materials;
changes in the amount or timing of federal and state income tax liabilities resulting from either a change in our application of tax laws, an adverse determination by a taxing authority or court, or legislative changes to existing laws;
the failure to realize significant improvements in job creation and public infrastructure in Northwest Florida, including the development of a proposed new airport in Bay County, which is dependent on the availability of adequate funding and the successful resolution of any legal challenges;
potential liability under environmental laws or other laws or regulations;
changes in laws, regulations or the regulatory environment affecting the development of real estate;
fluctuations in the size and number of transactions from period to period;
the prices and availability of labor and building materials;
changes in insurance rates and deductibles for property in Florida, particularly in coastal areas;
high property tax rates in Florida, and future changes in such rates;
changes in gasoline prices; and
acts of war, terrorism or other geopolitical events.

The foregoing list is not exhaustive and should be read in conjunction with other cautionary statements contained in our periodic and other filings with the Securities and Exchange Commission.