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St. Joe & Watercrest Plan JV, To Build Senior Living Community

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The St. Joe Company (JOE - Free Report) recently announced its plan to join forces with Watercrest Senior Living Group, LLC, for the development and ownership of a new assisted living and memory care community in Santa Rosa Beach, FL. The move comes as part of St. Joe’s effort to capitalize on the rising demand of senior care in Northwest Florida.

Specifically, St. Joe and Watercrest are planning to form a joint venture for this community that is currently expected to comprise 107 units. Out of these, 75 units will be for assisted living and the rest 32 for memory care. St. Joe is likely to be the majority owner in the project, while Watercrest will be for the management of community operations.

To be located off West Hewett Road, close to Highway 98 and the west end of Highway 30A, on St. Joe land, the community is expected to witness decent demand. Its construction will likely commence in 2019 and news residents are expected to be ushered in by the end of 2020. For Watercrest, which has its successful operation throughout the Southeastern U.S., the latest project will mark the first Watercrest facility in Northwest Florida.

Notably, St Joe's strategy to expand the size and scope of its leasing portfolio, as well as the resorts and leisure business, will likely provide cushion from revenue volatility in other segments. In fact, continued efforts to enhance its leasing portfolio have enabled the company to record encouraging growth in this segment for several consecutive quarters.

Nonetheless, inconsistent revenue performance in a number of segments and regional business concentration remain concerns for the company. Furthermore, intense competition hinders the company’s ability to lease apartments or raise rates.

Shares of this Zacks Rank #3 (Hold) company have outperformed the industry it belongs to, over the past month. Its shares have increased 1.3%, while the industry has inched up 0.7% during this time frame.

Stocks to Consider

Better-ranked stocks from the real estate space are Alexandria Real Estate Equities, Inc. (ARE - Free Report) , PS Business Parks, Inc. (PSB - Free Report) and Boston Properties, Inc. (BXP - Free Report) . You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Alexandria Real Estate Equities’ FFO per share estimates for 2018 has been revised marginally upward to $6.61 in 90 days’ time.

PS Business Parks’ Zacks Consensus Estimate for 2018 FFO per share moved up 0.9% to $6.45 in the last month.

Boston Properties’ FFO per share estimates for 2018 has been revised marginally north to $6.39 north in seven days’ time.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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