David Childers - Vice President, Finance and Investor Relations Wm. Britton Greene - President and Chief Executive Officer William McCalmont - Chief Financial Officer

Chris Haley - Wachovia Buck Horne - Raymond James Sheila Mcgrath - KBW

Good morning on this Election Day 2008. Welcome to the St.

Joe company conference call for 2008’s third quarter. I'm David Childers, Vice President of Finance and Investor Relations and on the call this morning are Britt Green, President and CEO of Joe; and our CFO, Bill McCalmont.

Before we start, let me remind you that matters discussed on this conference call that are not historical facts are forward-looking statements that are based on our current expectations. Actual results may differ materially.

Forward-looking statements are subject to certain risks and uncertainties that are described in today's earnings release, and in our SEC filings. These filings along with reconciliations of non-GAAP measures mentioned in today's call are on our website at joe.com.

Britt?

Thanks, David. Good morning.

This morning Joe announced a net loss for the third quarter of 2008 of $19.2 million or $0.21 per share compared to a net loss of 6.8 million or $0.09 per share for the third quarter of 2007. Results for the third quarter included a number of charges totaling $13 million or $0.09 per share after tax relating to pension charge, impairments, adjustments to our installment notes and our restructuring activity during the quarter.

The details are included in this morning’s press release. Current Focus.

During these extraordinary times that are impacting the entire real estate industry, we continue to make progress fortifying Joe. With virtually no debt and a strong cash position, Joe’s solid balance sheet better positions us to withstand the global financial crisis, the downturn in the Florida real estate market.

We also remain committed to continuing to manage our costs and we will maintain our focus on managing our home and home side inventory and assets to preserve long-term shareholder value. At the same time, we are focusing on the opportunities presented by the future opening of the new airport and are positioning Joe for when the real estate markets being to recover.

There were some of the highlights in the third quarter. We entered into a new $100 million revolving credit facility with Branch Banking and Trust Company.

Joe ended the quarter with $106.3 million of cash after receiving $69 million in net cash proceeds from a monetization of $77.9 million of installment notes receivable, and the construction of Panama City Bay County International Airport to continue to move forward on time and I will discuss that later. Now, I would like to turn it over to Bill who will provide some additional detail of the quarterly results and discuss our commitment to a solid balance sheet.

Bill?

Thank you, Britt. Before discussing the balance sheet, let me comment on the quarterly operating results beginning with non-strategic Rural Land Sales.

We continue to market non-strategic lands for sale to a wide variety of perspective buyers. During the quarter ended September 30, we sold 346 acres for a total $2.4 million.

In October, a previously announced contract for the sale of approximately 67,000 acres of non-strategic conservation land in Liberty, Jefferson, Gulf, and Franklin counties was terminated. A sale for a total price of approximately $130 million was to a close in two tranches, one in the fourth quarter of this year and the second in the second quarter of 2009.

This particular buyer had sought large contiguous conservation acreage. We have now returned these parcels to the market, offering this acreage in smaller parcels to other buyers.

We have seen a high level of interest in these parcels and in fact have already had one small closing this quarter. Given the strength of our balance sheet, we have no near-term need for the proceeds and we plan to continue in orderly disposition of this non-strategic land.

Turning to residential. Resort and primary residential sales generated approximately $9 million in revenue in the third quarter.

As we stated on last quarter’s call, the spring and summer selling season in our resort markets were disappointing. There continues to be resort residential resale activity in WaterColor and WaterSound Beach, but the market remains challenged by high inventory of the resale product, tight credit conditions and cautious customers.

The primary home market also remains difficult. We are working with builders to adjust their take down schedules and modify contracts in light of current market conditions.

Commercial land sale generated just over $2 million in revenue in the third quarter. While we're pleased with the level of long term interest we see in the Northwest Florida, commercial markets remain weak under current economic condition.

Leasing activity at our 58-acre 400,000 square foot power center across from across from Pier Park is progressing with several LOIs in various stages of negotiation. The forestry segment generated approximately $6 million in revenue primarily from the sale of 327,000 tons of wood fiber.

As know we have had an ongoing effort to reduce capital expenditures, lower our overhead costs and strengthen the balance sheet. We made significant progress on these initiatives this quarter.

We know a focused approach to capital expenditure is critical in the economic time and we are continuing to review our CapEx budget for all projects to make certain that each expenditure is prudent in this environment. In the first nine months of this year, we spend approximately $29 million after the application of CDD reimbursements compared to approximately $221 million in last year’s first nine months and $527 million in the first nine months of 2006.

We now expect capital expenditure for the full year 2008, net of CDD reimbursements, to be less than $50 million. These expenditures are primarily in our RiverTown, Victoria Park and WindMark Beach communities.

We also continue to focus on our SG&A. In both the fourth quarter of 2007 and this year’s second quarter, we announced restructuring plans dramatically reduced our employee headcount.

As a result of this restructuring and a continued focus on cost, our cash overhead, the combination of corporate overhead, field overhead and capitalized overhead, declined by about $10 million or 33% during the quarter compared to the third quarter of 2007. Further, we continue to expect our projected fourth quarter 2008 salary run rate to be reduced by more than 40% compared with the same quarter last year.

As we have previously stated, we are committed to a strong balance sheet and the real estate assets that represent long-term value particularly in these difficult economic times. At the end of the third quarter, we had cash and pledged treasury securities of approximately $136 million compared to debt of $51 million, which includes $29 million of deceased debt.

In the third quarter, as Britt said, we entered into a new revolving credit facility with BB&T with an aggregate principal amount of $100 million. We've not drawn on this facility, which matures in September 2011.

And given the current state of the capital markets, we are pleased to be able to close this three-year borrowing facility. Let me close my remarks by saying, we have a solid balance sheet.

We've virtually no debt. We've liquidity in excess of $200 million as defined in our new credit agreement, and we have no current plans to draw on this new facility.

Importantly, we believe this gives us the financial flexibility to weather these difficult market conditions. Back to you, Britt.

Thank you, Bill. Before we close, let me update you on the new international airport under construction within our 75,000 acre West Bay sector plan.

Almost half of inside infrastructure work has been completed to-date. Construction crews have started paving the primary runway and taxiways.

The contractor has mobilized and started work on the terminal control tower and support facilities. As the construction work continues on the new Panama City airport, Joe is aggressively pursuing opportunities for its assets adjacent to the airport at West Bay.

The new airport is being positioned as a focal point for economic development and air service for Northwest Florida and the neighboring portion of Southern Alabama. We are gearing up to compete for the industries of this century.

We are aggressively working with regional national partners to attract economic development projects to West Bay and concentrating on economic clusters expected to have significant growth potential on the region. The current cluster targets include aerospace, defense and security industries, international trade and logistics, alternative energy technology and health and human performance.

A new website www.newpcairport.com has been created by the airport authority to provide updates on the airport construction projects and I would encourage you to visit the site regularly. The airport authority remains on schedule and projects a May 2010 opening.

The US District Court in Jacksonville granted motions for summary judgment in the airport’s favor and dismissed the challenges to the Airports Army Corps of Engineers 404 permit. There is a 60-day appeal period after that ruling.

We are delighted with the district court’s ruling. The challenge to the FAA record of decision remains outstanding, but is not delaying any of the construction activity, and we look forward to its positive resolution in the near-term.

In summary, although we are facing very tough economic conditions today, we believe that when Florida comes back after this market downturn, Joe's assets in Northwest Florida are well positioned to lead the way. By working together now on important regional issues like transportation infrastructure, regional branding, economic and workforce development, we are building a strong foundation to fully realize our potential when our economy recovers.

We are hard at work to make West Bay one of the main focal points of our value creation process. At the end of the third quarter, Joe had land use entitlements in hand or in process totaling approximately 45,000 residential units and more than 14 million square feet of commercial space as well as an additional 592 acres with land use entitlements for commercial uses.

Let me remind you, Joe owns approximately 607,000 acres concentrated primarily Northwest Florida, and currently our total entitlement portfolio that I just mentioned is only and approximately 40,000 acres, which is less than 7% of our current holdings. We will continue to broaden our entitlement portfolio in the region as we build our long-term value generation strategies.

Florida has seen boom and bust cycles before. In every challenge, there is an opportunity.

The only way to get pass these troubled economic times is to push through them. Fortunately, our strong balance sheet and cash position allows us to be patient, prudent and prepared.

And with that, as we all keep an eye on the exit polls this afternoon and early this evening, we will be happy to respond to your questions.

Good morning gentlemen.

Hey Chris.

Two questions, if I can. First, could you offer a little bit of color on the contract that fell through?

Was it financing contingent, was it a buyer that you had in the past? I’d just like to little bit understand what changed and how that may have been underwritten?

And then secondly, recognizing that we are still in a very slow period and to Britt's comments that when Florida comes back, you feel more enthusiastic, you can feel more enthusiastic. You do provide information regarding your margins and grow most of your activity going forward will be lot sale only versus vertical bills.

Can you give us a sense as to where you think the long-term margins are for that type of sale activity?

I will start with the first one, Chris. The contract was with the previous buyer of Joe lands.

This is very non-strategic conservation oriented land. And it was frankly a result of the termination being a result of the buyer’s cost of capital and access the capital in the 11th hour that caused the termination.

And given the timing of the closing in the capital markets at that time in early October, it was - they decided to terminate and to leave the contract. It doesn’t mean in the future that we won't sell to that buyer.

They have been a good buyer in the past and I would expect would be in the future and understand the position they were in. I will let Bill maybe talk to margin.

He has the numbers in front of him.

During this year, Chris, on lot sales, we have seen resort margins plus or minus 50% and primary home margins plus or minus 20%. And that’s kind of the reality of our marketplace today.

Today or is that when you kind of – when do your long-term positioning, long-term strategies, are those kind of the numbers you are settling on?

Well, that’s today's reality. I think as we go forward Chris, in any one of the product points and price points, it will -- our lot pricing to builders into the retail market, I would expect in resort residential will work its way back, back towards where we were, but certainly not at '04 and '05 highs and I’d tell you that in the primary residential that it will take a while to get back to what we had sustained frankly prior to the collapse of the market rather than trying to pinpoint exact, I would say normalcy to lots not look like '04 and '05, but it’s not going to be as it is today.

Thank you. Just one follow-up on the timber on the 67,000 acre sale, Britt.

Were they typically – what are you typically in the past using about 1 to 1 leverage or was it all equity?

No. I don’t know that because in this case it’s purchased and it’s -- I don’t want to try to guess on that one.

I am not sure whether it was financing contingent. It's just that at the 11th hour they walked?

It was not -- our contract was not financing contingent.

Okay. Alright, thank you.

Hi good morning.

Good morning, Buck.

On the CapEx run rate, great detail there on the ’08 numbers. Is that the $50 million a good number for '09 or is there potentially any other things you can do to turn CapEx or how does that look and also – well, I guess you mentioned the primary components of that RiverTown and WindMark Beach and what not?

Buck, we are putting our plans together for '09 now as you might imagine and we’ll continue to modify those plans. I think on the last call we said that -- last quarter's call we said that we expected '09 CapEx to be less than $75 million.

We’d certainly continue to expect that. Some of this year’s CapEx we have differed until next year, so I would at this point expect it to range somewhere between this year’s -- around this year’s level and slightly up to may be 75 but…

Okay.

We have not finalized our plans for '09 and I am going to reiterate that that was very cognizant of disbursing these dollars very prudently and so we’ll continue to evaluate each expenditure based upon the timing and the return we expect from those dollars.

Okay. And one more.

Is there really any price elasticity left in the site sales at point? Meaning given the -- could you generate some more activity, some more interest from builders on land takedowns if you lower the price a little bit or it’s just a point where most of the guys out there looking just are not buying any price right now?

I don’t think it’s in our best interest to chase prices down at this point given the strength of our balance sheet and our liquidity position, so we have not pursued that strategy and don’t intend to. We are active in the markets and we have an understanding of where the markets are but chasing prices down is not in our best interest.

And frankly and let me just add to that, we are not seeing that to be productive by others who have done it.

Alright. Thanks guys.

Good morning. Could you talk about the pricing in the quarter for commercial acreage and rural acreage?

Commercial seemed a little bit low and rural seemed a little bit higher than typical. So I am just wondering if there were specific characteristics of those parcels?

No, not really. I think it was just a – it was a matter of – one, the size.

There wasn’t a large amount there and so the numbers can get skewed as a result, but the commercial sales were on market. And Bill, do you know the price on the…?

Rural land is about $7,600 an acre, which was very attractive, again the nature of that land with some of the topographical characteristics that were attractive to that particular buyer.

Okay. And then looking back at that -- the attractively land in the rural, there is contract that sell-through.

Is that all of that land back on the market and is that something that you think would close over the next 18 months. So how should we think about timing of the sale of that?

I think you ought to think about the timing as near-term and not over a number of years. And I do think that yes, it is all on the market.

We’ve had significant interest as a result of it being accept back on the market. And like we have said in our release when we terminated the contract, we put it out there in different sizes and parcel.

With the parcels because we think it just – it can create that activity. It was unique to have the one buyer for that much contiguous conservation land lane.

They are not there, but there are other buyers who are looking for different portions of what are considered significant conservation, but non-strategic to our future values.

And Sheila, the only thing I will add to what Britt said is that as we break that large lot, if you will, into various parts, you will see different price points for the different parts based upon the characteristics of the land. So some of that land will be sold as timberland, some of that will be sold as conservation land commanding a higher price point and I think you will see a variety of buyers come to the floor and close on those lands.

Okay. And last question, on joint venture that you mentioned in your comments, the commercial and your Pier Park.

Is that a 100% finalized and it's in leasing, if you can just update us on the status of that JV?

Yeah, the JV is 100% finalized with [Winter Realty]. The project itself is in process of securing leases with a variety of tenants.

And as you know, that sits across US Highway 98 from Pier Park Mall and is very well located and we have seen a great deal of interest in the site and have a number of LOIs that are in various stage of negotiation.

Okay, great. Thank you.

Thank you, Sheila.

I will just thank you all for today and be safe, and look forward to talking to you in 90 days. Thank you.

Thank you.