Catching Up with Carl: December 2016

Here we are at the end of another year.

I am reflecting a lot on the difficulty of getting projects signed that began their life before the recession, so pre-2009. In many cases, these are the ‘ready to go’ projects that we focus on. But, for the developer or owner to have them in their control, all these years means that the financing is convoluted, or they would have long ago lost the project back to the lender or its equivalent. So, lately we spend what I consider an inordinate amount of time working through the ins and outs of either a finance tangle or a developer who has so succeeded in keeping control of the project that he does not know how to let it go. All this assumes that Star offers a market rate deal and the prospect of success in marketing and sales.

That said, what does Star have ‘on the books’ at the end of 2016?

Ocean Lodge, the Golden Isles, GA: one of Star's real stars, in sales, has agreed to kick off our selling program in 2017. Sandy Staudenmayer is the key player for us and for Ocean Lodge. She'll arrive in January. We have our Scott Tracy to thank for getting Sandy in the 'do' mode.

The Seagate building, across the street from Ocean Lodge, includes 24 one-bedroom units, condominiumized and ready to go for sales of whole or fractional units to extend the sales program at Ocean Lodge. It’s in the process of getting financed thanks to Peter Temling and our Marvin Rappaport, who is Star’s VP of finance. We are there December 8th to start the financing process. Wally Hobson is doing the feasibility for Star.

Saratoga Springs Polo is still in legal limbo as we work through the process of leveraging out the two errant partners. We believe, at worst case, we'll end up with either the property [our first choice] or a financial settlement.

Windham Ski, Poconos: Duane Gerenser, Star’s VP of development in the Northeast, is working with the owners to get an agreement that will also allow Star to finance and build out the some 300+ home sites there.

Alas, I am afraid the Big Bear, CA, project, Marina Pointe, is slipping away as the owner does not want to sell all or part of it to our group. See my notes at the beginning of this newsletter about developers who have kept the dream alive for over a decade.

Mahalee, in Markleeville, CA, is a large development in California’s Sierra Nevada, about 30 minutes to South Lake Tahoe, and includes unspoiled country and four-season activities. It was counting on what Star considered unrealistic financing avenues, but is back again and more realistic this time around. We are assisting the owner to correctly package the property for sale or for selling.

So, Merry Christmas and let’s all plan for a grand New Year.

Catching Up with Carl: November 2016

It’s been a long drought, but we finally signed a marketing and sales contract at Ocean Lodge on St. Simons Island, just off the Georgia coast. Brunswick is the nearest town. We’ll be selling fractions and time share interests. A big ‘shout out’ goes to Marvin Rappaport, who engineered the ‘deal’ for us. Also to Chris Cannon, our chief marketing guru whose work is now just beginning. And, of course, to our Scott Tracy, who as always keeps Star on the right path.

At Ocean Lodge—a boutique hotel, 15 rooms and rooftop restaurant—we are taking it ‘private,’ or from one owner to many… a transfer of debt from one to many to say it another way.

St Simons Island is adjacent to Sea Island, long the ‘class’ of the barrier islands. Pre-recession they instituted a quarter share program; purpose built, with very large units. They were all reserved, but not closed.

Then, September 2008 came and most dropped out. Just recently Sea Island, itself having gone through a change of ownership for the hotel and unsold lots, re-commissioned the quarter share program. Randy Burgess is the PD and sales manager, and a top-flight professional. The two products [Sea Island quarters and Ocean Lodge 1/12 fractions] are so different that we don’t see much in the way of one-on-one competition.

Our other deals are moving along, but not ready to activate:

•Marina Point at Big Bear, CA—we are negotiating with the owner on a purchase of JV.
•Saratoga Polo, NY—we are in the process of calling for mediation on the way to arbitration, or to file a lawsuit to bring our two of five partners to heel.
•Windham Ski, Poconos, NY—we are moving ahead with the owner on a venture.

 There really is something to be said of the ‘Art of the Deal’ in getting these pre-2008 projects to a point that it makes sense for Star to either buy, venture or market and sell.

Or, to say it another way, if one wants a current deal, ready to go save registration, etc, then if it existed pre-2008 it’s got a lot of ‘hair’ on it. Congratulations are due to the owner for keeping it alive these past nine years [or more]. But that means the debt is turned upside down and the approvals, still valid, may have changed over the years.

So, onward Star goes. For a Western-based company St. Simons is a long way to go. But, a deal is a deal.

Catching Up with Carl: October 2016

What does it take to get a project under contract, or a 'deal done'?

This has been an agonizing period for Star. We've added to our team Duane Gerenser for the Northeast and Marvin Rappaport for the Southeast and the Pacific Coast. Duane is a real pro when it comes to negotiation and deal structure. In addition to negotiating, Marvin is a pro when it comes to finances. Both bring skills to Star where Scott Tracy and I are already stretched, so their participation expands our bandwidth tremendously.

Once we get a project [Saratoga Polo, Saratoga Springs, NY; Ocean Lodge, St. Simons Island, GA; or Marina Point, Big Bear, CA] under contract and funded, then our Chris Cannon can swing into action on marketing and lead generation.

At the end of the day, lead generation, based on solid marketing research, is still the key to success. Sales—the turning of a paper contract into cash—is still the 'name of the game' big time! Star has accepted its role in marketing and sales, to include the risk side of the business and its role in a project's life.

It's kind of like raising money. Some folk like to 'ask for the order' and others like to cultivate. Star has a network of sales pros who like to 'ask for the order' to close sales at a project.

Star’s legacy is getting the sales made and closed. That’s where our Scott Tracy comes in—the closing part. Among his other key skills, he excels at escrows and closings. That’s the key step in converting a piece of paper to cash. Without that step there is no resort development business. Scott also is key to project management, another skill set that’s important to any project.

For sales, or getting the sales made, we have a group of experienced and skilled project sales managers [and project managers for that matter] that are available based on their time and our project. That’s what 30 years in the business does for you. And one needs to treat these skilled professional right, so they want to come back to the next project.

More next month…

Catching Up with Carl: September 2016

The good news is that deals are flowing again. The difficult news is that any project that hung on over the past decade is out of money. As usual, money is tough to raise these days, or any day. The most difficult money to raise is the front money to get a marketing/lead generation and sales program going. It really needs to be secured by ‘something’ more than the reputation of the marketing and selling group—in this case, Star Resort Group LLC.

We have a handful of ‘deals’ working:

Saratoga Polo, NY, is still entangled with legal issues, though Duane Gerenser and Mike Connor [Connor Homes] have both done a terrific job in keeping our interests alive.

Windham Mountain Resort. Windham is an established New England ski hill. The owner of the ski hill [plus major base lodge and condo buildings] just died. We have targeted 300+ acres adjacent, and ski-in/ski-out on the Windham ski runs for a venture with its owner, a Greek shipping magnate. Not sure where this will end up—with the whole thing or the 300+ acres we’ve gone after.

Ocean Lodge, Saint Simons Island, GA. This 15-unit boutique hotel, top flight, was set for timeshare. Our team, augmented by Marvin Rappaport, as recommended a change to 1/12 fraction, flex use, and we are working through the details of a marketing contract.

Marina Point, Big Bear Lake, CA, is a major project at Big Bear Lake, which has traditionally played second fiddle to Arrowhead Lake, but recently gained critical mass to surpass Arrowhead. With Marvin Rappaport as well as Peter Teming we are in the process of determining whether to go for a condo hotel, mixed-use [fractions and whole] or some other configuration. The key will be who pays for amenities such as the marina, clubhouse, etc.

Mahalee, Markleeville, CA. Located in Alpine County, 30 minutes to both Kirkwood Mountain Resort and to South Lake Tahoe, this project, inn, condos and fractions is now—after more than 20 years—fully approved and needing cash to proceed. Tom Abdoo, the developer, has to be congratulated for his tenacity in sticking to the vision. We are assessing the viability of the structure and may or may not take a position in the project.

Fairmont Heritage Place at Ghirardelli Square, San Francisco. We spoke to the first in line to buy the remaining inventory. Money again. We have offered our services to ‘clean up’ the fractions assuming he closes. Art Spaulding, crack real estate lawyer at Cox Castle and Nicholson, is involved for the financing and CA DRE approvals, not to mention what the City and County of San Francisco may say.

Any two or three of these will do just fine.

Catching Up with Carl: August 2016

Boy, deals are hard to close if you want to ‘do it right.’

Saratoga Polo, in New York state, still lingers as we get the documentation correct. The good news is that the polo season is progressing grandly thanks to Jim Rossi and Mike Bucci, who have managed this process for a number of years. Record crowds and grand polo. Duane Gerenser heads our team there.

Ocean Lodge, on St. Simon’s Island off the Georgia coast: Our proposal to change from timesharing to fractions is still in process. Owner Joe McDonough and project director Ken Cates are working over the proposal sent by the team of myself, Marvin Rappaport and Scott Tracy.

Big Bear Lake, California: Marina Point is unfortunately in the general area of all the fires. We have a proposal on the table with the owner to build out seven of the buildings with a total of 49 two-bedroom, lock-off units to fractionalize. There’s a sudden interest in a hotel component, as well as a real market for whole units, too. We will get to that in the second step. This also is with Marvin Rappaport, Scott Tracy and myself as the team.

Markleeville, California: Located in the Sierra Nevada mountains about half an hour from South Lake Tahoe, this is a project 19 years in the making. Scott Tracy and I are leading the team, and are working with Dick Ragatz on the project appraisal and funding.

Then, there’s Windham, New York, a very successful four-seasons resort area north of NYC. Adjacent to the ski area is 340 acres ready for development. We have met with the owner, who is currently in Greece, and his team, and see this as a follow on to Saratoga Springs. Again, Duane Gerenser heads our team for this potential deal.

Lest we forget there’s Tunisia, which is currently in limbo due to illness and replacement of ministers in the country.

Catching Up with Carl: June-July 2016

   The art of the deal: My team has been living with that ‘art’ for the past 60 days on our Saratoga Springs Polo project. We’ve had to say goodbye to two of our five partners and replace them with two more. That negotiation has been the ‘art’ of the deal. Duane Gerenser has led the process and done a great job.

   These approximately 100 units comprised of single-family detached Connor Homes, condominiums in 4- and 5-plex buildings and a single townhouse building of some 30 units that we plan to offer on a fractional basis make up the inventory.

   The units will be mixed-use for sure. And, contrary to our history, we believe the majority will be residential, either first homes or homeowners moving up or down in square footage.

   The Whitney Polo field will be kept. In fact, the season is on-going right now. The polo ponies are churning up the sod and the polo ball is being smashed left and right.

Lots of deals perking; limited money as in the past few years. So, if one or two come our way, we’re in business in addition to Saratoga Springs and St. Simons Island:

•Big Bear Lake, Harbor Pointe, CA: This neat project 19 years in the making to gain approvals should be a home run. We are needing financing for the take-out, and Dick Ragatz has his hand in this one.

•Ocean Lodge, St. Simons Isle, GA: A timeshare project that needs a lender take out. Good team in place, and a terrific developer, Joe McDonald.

   Marvin Rappaport, our colleague in Coral Gables, FL, is assisting us on the two projects above. As a matter of fact, years ago he was a camp counselor at Big Bear!

•Markleeville, CA: It’s been 20 years in the making to gain approvals for the Mahalee Lodge, half an hour from South Lake Tahoe and Kirkwood ski area. Dick Ragatz is again involved. The project involves a wonderful condo lodge and lots of housing on some 700 acres; lots of fractional interests, too. The main market is Silicon Valley.

•Windham Ski Resort, NY, has about 300 acres for purchase next to a very successful ski hill operation, major lodge and associated homes and condos. We are working with the owner on a venture.

•Frigate Bay, Caribbean: Upscale island location featuring $1 million fractions. Whew!

•SnowValley Resort, Tunisia: Can’t forget this one—the world ski and summer resort will get going once financing is in place.

Catching Up with Carl: May 2016

Summer is about upon us. Time to get deals closed up.

Saratoga Springs polo site: We are before the city planning board for our specific site plan later this month. We've had a breakthrough with a local bank on existing project loans, which allows Saratoga Springs Polo LLC [SPA LLC] to move ahead and get underway. I'll be there, again, the first week of June.

St. Simons Island Ocean Lodge is moving ahead in good form. Bill Ward, Ward Financial, is working with the ownership team to redo the existing project financing to accommodate buyer loans on a basis that makes more sense to a rapid sell out.

Tunisia Sports City: This very adventuresome project, which includes an indoor ski hill and many other sport venues plus lots of condos and fractional condos, continues to pick up steam. The Dubai financing fund is an investor. South Africa's Denise Walker, who is in charge of project marketing, and CEO Tom Stewart are the main kingpins of the deal. Star is to do the sales.

Big Bear Lake, CA: Marina Point, the Marina Village that owner Irv Okovita has spent 20 years getting zoned, is ready for purchase and selling. The property is right on the lake and comes with a marina. Peter Moore, from Corporate Finance Associates, and I will be at the property on May 28th to see about a proposal to purchase the development.

Lots going on as one can see. Star needs to close on at least two if not four of the projects to take us into 2017 and beyond.

Catching Up with Carl: April 2016

Star recently began working with Ocean Lodge and SeaGate Condominiums, both on St. Simons Island off the Georgia coast. Ocean Lodge is a very successful boutique hotel. Knowing the lodge’s 14 rooms would be only the start of his fractional program, owner Joe McDonough optioned the nearby, 24-room SeaGate, which is run as a condominium/hotel. McDonough also optioned the two houses between the projects, which will be demolished to create a solid and visible connection between the two buildings.

McDonough had Baker & Hostetler in Orlando, Florida, draw up the basic docs, then had an Atlanta-based firm conform them to Georgia law. Georgia is a disclosure state versus a registration state. Ocean Lodge has been accepted by The Registry Collection.

Star is to be project manager with an override on sales and a percentage of net sales as an incentive. This is a grand opportunity.

Star is also working on a project on Sea Island, Georgia, located next door to St. Simons Island. Randy Burgess is the project director who will complete sales of the ¼-share fractional program begun pre-recession, put on the shelf and recently restarted. The Sea Island project is much different than Ocean Lodge/SeaGate, so there should not be much, if any, competition between the two.

Back to Saratoga Springs: The appraisal came in lower than expected, so the bridge loan was not taken down. The project is still limping forward with severe cash flow needs. That said, one of the five partners is Mike Connor, founder of Connor Homes of Middlebury, VT, and early advocate of factory-built, quality homes. One of his homes is being featured on PBS' This Old House for 2016 and Connor is getting over 7,000 leads per week!

The project, Saratoga Polo, will link to Connor Homes to gain additional traction for sales. Additionally, real estate group Keller Williams Capital District will have a co-listing on phase one of the project. Many of the sales will likely be whole units, first and second homes. We've carved out a deck of units for fractional sales in 2017.

Tunisia, you say? Star has been approached to handle sales of SnowValley Resort, a North African mega-project. The drivers behind it are South African–based marketing executives Tom Stewart, from Scotland, and Denise Walker. There will be indoor skiing and a whole list of indoor winter sports to include ski cross, aerial events, halfpipe, slalom, snow tubing, ice skating, curling, long and short track skating, figure skating and ice hockey. Summer sports academies will include tennis, swimming and diving, gymnastics, basketball, indoor soccer, taekwondo, weight lifting and much more.

This project, should it come to pass as planned, is a once-in-a-lifetime opportunity. Oh, and it will include whole and fractional condos. That's Star's play.

Catching Up with Carl: February/March 2016

This is a combined newsletter as I missed February. No, the one extra day did not get me off track; just busy with deals and other stuff.

Saratoga Spa Polo is my main focus. With 100 units, we estimate that the majority will be first or second homes, whole units. We plan to keep about 20 units of the 100 aside for fractions.

The project was originally planned, just before the recession, to be 100 percent fractions. Saratoga Springs has picked up so much steam that a few years later there’s a lot of movement up from Albany [the state capital] 30 minutes away for those who want culture and to be closer to the outdoors. And,Saratoga Springs is a real draw in itself. 

We assume, supported by local brokers, that those either downsizing or upsizing will be the primary, first home market. The second home, or pre-retirement market, may come from neighbor communities nationally or internationally due to the polo exposure.

As the property abuts up to Skidmore College, we expect a good play from its alumni. Skidmore has a collegiate polo team, one of some 140 colleges with a team. And, a polo field is 9.5 times larger than a football field, so there’s quite a green belt.

Note: partner Mike Connor, of Connor Home, has a 12-part program on This Old House on PBS featuring a Connor home.

We held a focus group comprised of local Keller Williams agents a few weeks ago. We had a lead agent servicing the 30s market, the same for 40s and 50/60s markets, in addition to the ‘boss’ who owns the KW franchise for the Capital Corridor area. They were very high on the first and second home markets for whole units. We did not get into fractionals with them.

We plan to have single-family detached homes; duplexes (though not the typical type—ours will have a main house and then a ‘carriage’ house, with some larger and smaller so one can buy either or one or the other); and then condos in a four-plex configuration.

The property has a commercial zone, so we are planning a small inn with community pool, workout facility, café, etc. to cover that part of the amenities. And yes, the polo matches will still go on in the summer as they have since 1898. 

Catching Up with Carl: January 2016

Just back a theater trip in NYC and sloshing around in the big snowstorm.

Saratoga Springs Polo project is coming along just fine. Our key partner, Duane Gerenser, who lives about an hour from the site, is project director.

 I was there two weeks ago and will be there the week after next. All five partners in our development team are dedicated and talented folk. Mike Connor, CEO of Connor Homes of Middlebury, Vermont, is designing our prototype homes, duplexes and condos. Mike Bucci and Jim Rossi, who own the property, have run the polo season on the historical polo field for a decade. Duane Gerenser is project director and partner; and I am handling the development, marketing and selling part of the project. All the minutia involved in MOUs, LLCs and the operating agreement have taken time but are integral to the project.

We'll end up with about 100 units for sale. Our goal is to do 15 to 20 as fractional, which involves a separate filing with New York State.

Two weeks ago I made a quick trip to Aspen to see the World Championships of Snow Polo. Very interesting and highly entertaining—both the polo and the fans from around the world. St. Regis was the main sponsor.

The Saratoga Polo Association is comprised of 42 acres that surround the polo field, established in 1898 by the Vanderbilt and Whitney families. Our group has not only bought the 42 acres for development abutting Skidmore College, but also an operating company the produces the annual (since 1898) polo matches on the summer east coast circuit that begins in Florida and comes up to Saratoga, with stops in the Carolinas, Virginia and Westchester, NY, before landing in Saratoga Springs, which is a quite amazing city with year-around arts programming, the historic race track and over 130 restaurants.

Other stuff? Chasing San Francisco fractions, a deck of Canadian projects funded by a Calgary bank, and the uber high-end Caribbean fractional deal that seems to have a difficult time in coming together.

The two Florida Keys projects that we chased for many years have not come to us, I am sorry to say. More next month.