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.

Catching Up with Carl: December 2015

Pushing to get the deal done: Saratoga Springs, NY, 30 minutes north of Albany, the state capital.

The iconic polo field, established in 1898 and still in use today, encompasses 42 acres. Development plans call for approximately 80 units, cottages and homes surrounding the field, plus an Events Barn and transient, overnight lodging units all to join the existing clubhouse replete with trophies, silver cups and lots of history. 

Star is venturing, and in charge of marketing and selling, with sellers Jim Rossi and Mike Bucci, both very talented guys, as well as Duane Gerenser and Mike Connor of Connor Homes in Middlebury, VT.

Saratoga Springs, five miles from Saratoga and the historic Revolutionary battlefield, National Monument, was established in 1819 and has a glorious history. Saratoga Springs was the first big spa town in the USA, at one time the site of the world’s largest hotel, and the Saratoga Performing Arts Center is still the summer home of the Philadelphia Symphony and the New York City Ballet company. 

Like many early attractions, the town fell asleep post-WWII and then woke up some decades ago and got back on track.

The thoroughbred racetrack is run by the New York Racing Association and follows the Triple Crown. The racetrack is considered to be in the top four of all racetracks in America.

The harness racing season is also long standing and well attended. It is adjacent to the Saratoga Casino, which offers all electronic gaming. The proceeds go to the Saratoga schools and the harness racing purses.

Then, of course, there’s polo. William Collins Whitney [that’s right, those Whitneys] established the polo field a mile from downtown in 1898. On the major circuit for polo in the USA, its season draws the world’s most elite polo players. The original legal entity is still in place and owned by our group: Saratoga Polo Association, or SPA for short.

The development plans, as now set, call for approximately 80 homes/cottages surrounding two sides of the field with commercial on the third side. The acreage abuts Skidmore College, which is home to one of 140 collegiate polo teams. 

Catching Up with Carl: November 2015

Dick Ragatz and his realty-sales operation is paying off. We are looking at two projects he represents.

One is an iconic property in mid-New York State and the other in San Francisco. We are working on the financing and feasibility of both. The New York State project is easier for us to get closed as all approvals are in place, and it's smaller and hence less money to raise. I’m currently flying to the Albany, New York, airport to get 'boots on the ground' for this deal. Mixed use; lots, Connor homes, townhomes and fractional homes.

Our team stands ready to get to work. Scott Tracy, our broker and director of administration; Chris Cannon, our senior marketing exec; and Richard Korowicki, our senior sales exec.

We are also working on a very high-end whole and fractional project on a private Caribbean island. Will the upper-crust buy $1 million fractions? We think so, and are guardedly optimistic.

For the New York project, Star would be a developer; for the Caribbean, a marketing agent. I sometimes wonder which is the most advantageous. What do you think?

Connor Homes of Middlebury, Vermont, is an interesting evolution. This is the high-end manufactured home company with over 100,000 square feet under roof and a long history of quality New England-style homes. Mike Connor is the founder and still CEO.

Currently, they are being filmed by the PBS program This Old House. Recently, via an Atlanta architect, they fabricated 30 cottages to be sent to the Cabela's project in the Ozarks. As their reputation grows, they are looking to 'brand' projects with their homes. For our New England area projects, we have an exclusive deal with Connor. Yes, a bit more expensive than 'toss it up' stick built, but higher quality and we bet the market will pay a bit more for a Connor home.

On the money front, Peter Moore, from Corporate Finance Associates out of Portland, Maine, is our key man for funding all our projects. He's a real talent. 

Catching Up with Carl: October 2015

Back from hiking 110 miles in England. Grand stuff, good weather for all but two of the days, and fun times in London pre and post hike.

Star is now fully disengaged from Seahorse Beach Club on the Texas coast. Personally, I’m still on one of the home loans, but that will take care of itself.

Burnt Mill, Maine, continues to be tough to tie down. The owners, the L.A. folk, are reexamining all options. On our side, we have put together options to take them out. We’ll see what happens in the coming days. One change is that the golf course is being reimagined as a nature park, which means less money to build and sustain, and easier to fund.

Peter Moore, our investment banker, continues to show a great amount of flexibility in arranging the various elements for full financing. His job is now made easier that the golf course is becoming a nature preserve.

Connor Homes of Middlebury, Vermont, is more than ever the primary homebuilder—and home designer—that we are placing our bets on for an upscale project. Founder Mike Connor has been very forthcoming with his time and talents to assist with the strategy for the resort.

Crystal Resort, in the Florida Keys, also continues as a moving target. Will it be a full timeshare resort, fee for service, with a brand, or a PRC or workforce housing? Gosh, a prime parcel with about $8 million equity, no debt, and it seems so hard to get the right investor.

On the horizon:

•Kauai project, single-family homes to be fractioned; sales on the West Coast, Honolulu and on site. Mitch Imanaka and Steve Peterson are designing the strategy for sales and registration. First things first, the developer needs to get the purchase agreement fully signed and then funded. Bill Ward, of Ward Financial, is very positive on buyer financing.

•Barbuda Island, Caribbean: Lighthouse Bay Resort, very, very high-end fractions; selling at over $1 million per 6th. Heavy U.S., European and South American sell. This is a fly-to island, private plane, and the property’s all bought and designed.

Other stuff over the transom, but not worth mentioning. In other news, Tom Goetschius has a new website designed by Marc Saxe. Take a look:www.tomgoetschius.com. 

Catching Up with Carl: September 2015

Some deals come and some go as we all know.

We are nearing the end of September and Burnt Mill in Maine is not yet funded with the bridge loan, yet the golf course work has to begin by October 15th. It takes balls of steel to be a developer.

Of import, the owners have realigned their decision-making, so we now have a real pragmatic person in charge. That’s terrific. Peter Moore, our investment banker, is close to the bridge and the permanent loan. The October 15th date is fast upon us!

Florida for Crystal Cove is, on one hand, leaning toward at full TS fee-for-service project, and on the other a 34-unit PRC, which we at SRG favor. We’ve been canvassing the major TS companies to see who is most interested, or has the bandwidth to consider the fee-for-service opportunity.

Then, there’s Seahorse in Texas that we are now out of; too many conflicts with our partner.

Spoke with Tom Ward of Ward Financial recently about end loans for fractional buyers. He says that there’s money out there for end loans. He just needs a well-structured project with sales velocity to attract a lender.

Other deals that could be on the horizon: The Sanctuary at Frigate Bay, Caribbean, a posh, small island with luxe houses and condos to be built; fractions at $1 million to $2 million a share. Now, that may just be a deal.

There's a ULI meeting in San Francisco in a few weeks; my Recreational Development Council is having an update on fractions, and I’m hiking in England. Darn it. Maybe they’ll hold over to the next meeting in Spring 2016!

Kauai project? The Ragatz study is completed and the developer wants to break all conventions and sell fractions on America's West Coast: CA, OR, WA and BC. Will it work? It just might.

Hiking in England from September 26th to October 13th with a couple of days in London pre and post. The South Downs Way, 110 miles in 10 days for us. Inn to inn. What’s not to like?

Catching Up with Carl: August 2015

We are working diligently all this month on our deals.

Burnt Mill, Maine, has slowed down due to bankers being on vacation during August. How old fashioned! But, it is as it is. All in place for a term sheet and bridge loan to get us going. The Wells Planning Board has changed some definitions on the approvals, but we’re working through it.

The golf portion has been the most difficult to obtain via our investment banker, Peter Moore. The real estate [lot sales] and hospitality have been easier.

We are certainly ready to go and get into the first phase, residential sales, this winter for the local market of Wells, Maine, and the surrounding area.

Crystal, Marathon Key, Florida, is currently in the process of being acquired from the owner, and then one of two plans will go into effect. Star will assist with either:

   Plan A. a full timeshare resort with a brand selling it.

   Plan B. a PRC using the 34 Rogos that came with the old motel.

Florida Keys Resort, Marathon Key, Florida. I made a quick trip last week to plan with the owners, Index and Peter Rosasco, for fractional sales. What a beautiful place it is. I had not been there in a year. We are still planning on detached cottages, but also looking at six-plex units, which may be lower cost to build and certainly a lower price to sell.

First things first, though, and that’s a branding process, which has not yet been done to determine who the resort will cater to and that will have a great effect on what is built for fractional sales. Hopefully, we can move the owners ahead on this initiative as it’s key to the overall success of the hotel, golf, fractions, etc.

New Deals?

   1. Kauai, a much touted deal, Ragatz study complete; non-waterfront, cottages to be fractioned on 1/12th with some substantial areas to be cleared up.

   2. New Orleans, Square 97 is back again, as a full condo plan subject to zoning okay.

Catching Up with Carl: July 2015

The middle of the summer is here.

Star Resort Group has news:

   1.  The principals of SRG, Rich Feldheim and Carl Berry, have agreed to separate and pursue their own projects.

   2.  SRG is now a Montana LLC solely owned by Carl Berry.

   3.  SRG is in the process of terminating its partner position in Seahorse Beach Club due to differing goals to pricing and absorption.

   4.  SRG is closing in on two major projects: Burnt Mill in Southern Maine, a mixed-use, residential, rental and fractional community of some 173 units, and Crystal [new name TBD], a high end PRC + mixed-use residential on Marathon Key, Florida.

Both of the new deals have had a protracted birthing process. Financing has been key to both, but that is well underway.

It used to be that Star was paid to come into a project. Since 2008 and the recession it seems that Star has to contribute to be in the ‘deal.’ That’s been a drag on the company’s finances.

Our crack team: Scott Tracy, company broker and senior administration exec, Chris Cannon, our top marketing exec, and Richard Korowicki, our senior sales exec, are all ready to go on the new projects.

2016 will be the year the company makes money; first since 2007!

Catching Up with Carl: June 2015

It's mid-June. My home airport now is Glacier Park International near Kalispell, Montana. So, business trip are out of FCA versus San Francisco or Oakland. Our 20th summer in northwest Montana!

I continue to worry about our Seahorse Beach Club on the Texas Gulf Coast, outside of Houston. That area has been hammered with rain, as you have read, and in general, rain aside for the moment, the weather has been truly lousy. How the six million residents of Houston put up with the weather is beyond me. The rain fact has impeded sales dramatically.

On our way from the SF Bay Area to Montana we spent the night in Bend, Oregon, and had a delightful dinner with our Seahorse consultant Tiffany Clark and her husband, Cameron.

At the end of this month, I am heading up to Wells, Maine, to attempt a close on the Burnt Mill project. All is about ready for a launch this fall with financing coming along on schedule. Could I get any farther away from home in California?

Then, on the Crystal project in Marathon Key, Florida Keys: My mentor, Marvin Rappaport, is awash in 'deals' for the property. It seems that there's a never-ending line of qualified investors or investment companies. Right now the concept that seems to generate the most traction is the full condominium/whole/residential/transient/fractional program versus the hotel and fractional cottages.  The final 'winner' of the financing will determine the build-out.

I attended the Urban Land Institute meeting in Houston in between rainstorms. Chris Fair gave a very interesting report on his firm's study of Millennials—how they differ, and where they don't, from Gen Xers and the younger boomers. The bottom line is that after they marry and have a family they are pretty much like other buyers of resort real estate. Yes, there's the sharing philosophy and the 'why buy anything' attitude while single that has been so widely reported.

For sure, as we have known, the Xers and Millennials want to use the electronic media more than the boomers, they want to do their own research, and they don't need a fancy sales center.

Catching Up with Carl: May 2015

Here we are heading again to summertime. Our view of the economy? Still struggling to right itself under the burden of Federal debt and regulations. So, we look at each day as two falls out of three, as the expression goes, to make sales.

Seahorse Beach Club, outside of Houston on the Gulf, remains very sluggish due to pricing and the energy retraction in Houston. I'd like to say we have a roaring success at Seahorse, but that's not true. Sales have been like pulling teeth. We still believe in the project and the homes we have built, but buyers have been few and far between and the overall market slow.

On to Marathon Key and Crystal Cottages: Project financing for the Marriott Residence Inn and fractional cottage construction is almost put to bed. The partners have so much equity in the deal that it's almost harder to get the financing we want versus what we might have to take in another scenario.
What about fractions? There have been few successes in the past year, although the assumptions behind the product remain strong. The good news is that as prices for whole homes continue to raise that makes a fractional interest look all the better.

The Florida Keys remain a hot market, so these Gulf-front cottages should be a winner.

This week, our team descends on the Burnt Mill project in Wells, Maine, to get a firm grasp of the marketing and selling issues. We have retained a first-class loan broker to arrange funds for even the golf course (gulp), a tough finance these days.

Other potential deals continue to swarm around us: Sunset Boulevard in LA, Big Bear Lake in Southern California, Telluride, Colorado, and the like. Will any come to pass? It's a combination of time and energy, and of course money.

Star has redone its website, so take a look: www.starresortgroup.com.

Catching Up with Carl: March 2015

Progress and a step back, but progress nonetheless.

At Seahorse Beach Club, on the Gulf Coast outside of Houston, we've decided to focus on lot and home sales this summer and hold off on the PRC. We are not moving away from the PRC, but need to have the money 'in our pockets' to really re-launch and do it right. Should we know better? Sure, but that's life. This is a big step for us as we see Seahorse as a true mixed-use resort, whole and PRC, but it made sense to restock our bank, so to speak, and then do the PRC right.

Also at Seahorse, we have decided to re-position our club as an event venue and conference center in addition to a club for owner use, and to finance it as a stand-alone entity versus being solely paid for and supported by property owners, as we had originally envisioned. We can get multiple resources from Houston for management and marketing.

True developer decisions based on market realities. Congrats to us!

Marathon Key, Florida, our Crystal Resort with mixed-use whole and fraction, is in the final stage of construction financing. With about $16 million of equity the construction financing should not be difficult. Our plans are to begin pre-sales (yes, against some odds we are engaging in pre-sales due to the very hot Keys market) next winter and deliver inventory late spring 2016.

The other Marathon Key deal, Florida Keys Resort, is drifting away, or so it seems.

Wells, Maine, is progressing well. The big hurdle is to finance the golf course, which is not easy, but then again, with more than $8 million in equity that is quite do-able. The project has six elements to it: [1] golf course management, [2] lot sales both single family and duplex, [3] spec homes by Conner Homes of Middlebury, VT, a terrific operation, [4] PRC in homes and duplexes, and then [5] lodging, hospitality with a deck of B and Bs and the club facility, and finally, [6] the acquisition and management of an existing B and B on the Beach at Wells.

So, a six-fold operation, but it covers the necessary bases for success. My partner, Duane Gerenser, has the overall vision, and will lead the execution of it all.

New Orleans? We've placed that on the back burner until we get the financing to bed for Marathon Key and Wells, Maine.

Next week, I'm off to Big Bear Lake outside of LA to see a 'ready to go' deal, and then the following week to LA and a Sunset Boulevard deal. It's a long shot, but who knows?

More as it comes to pass…

Catching Up with Carl: February 2015

After the drought, 'deals' seem to be everywhere. What a welcome change. Let's take a look at what we have and what we are working on:

Under Development:

Seahorse Beach Club, on the Gulf outside of Houston. To what extent will the falling oil prices affect our market? Yet to be determined. Certainly, the petro-chemical giants in our area will prosper due to lower oil prices. But, the Houston market? Let's hope that with their reliance on medicine and energy, the former will pull us through with good prospects.

Going After:

Florida Keys Resort: Writing this newsletter, I am returning from Florida where our team made a presentation to the resort owners, Index Investing, a Swedish company that invested heavily in the Southeastern USA. We hope to score a marketing and sales contract for this Marathon Key project.

Crystal Resort: Also on Marathon, this resort will feature a Marriott Residence Inn and 13 fractional cottages on the Gulf. We have a signed marketing and selling agreement, and now need the financing for the hotel and cottages. We have the prospect of an additional eight cottages on an adjacent parcel to Crystal.

Burnt Mill: Located in Wells, ME, and named for a mill the local Indians burnt in the late 1600s, this mixed-use project will include lots, homes, fractional homes and duplexes, golf course and a fully amentitized resort. We are lining up financing for the three component parts: the golf course [tough], the real estate and the hospitality operation for some site-located B and Bs and rental homes all designed to generate traffic and income. We plan to work with Connor Homes, a terrific modular company out of Middlebury, VT. Also, it's in the plans to acquire an existing B and B in Wells Beach for cash flow and as a 'forward station' to the use of Burnt Mill owners some three miles away.

Looking At:

Big Bear Lake, CA, an existing lakefront resort, fully entitled for lot, condo and fractional sales.

Sunset Blvd, LA, for condos and fractional sales. Back to the urban market.

Bear Valley Ski, CA, for Village planning and financing.

Telluride, CO, for bulk sale of fractional interests.

New Orleans, again, still after Square 97 and another property for retail, commercial, condos and fractions.

Heck, if just a couple come to pass, not bad?

Catching Up with Carl: January 2015

You know the saying, 'When one door closes another one opens?'

Well, it seems that it's true once again. As I write this, the future financing and participation of the Florida Keys Resort, on Marathon Key, is in real doubt. It amazes me, and others, the number of really financially qualified individuals and companies, who spend significant monies in due diligence and then disappear into the mists. This is for a deal that has all approvals, in one of the hottest markets in the country and is, as that other expression says, ‘shovel ready.’ Really.

Then, from up in Wells, Maine, comes a fully approved golf community that I visited with Sherman Potvin some years back. As that same expression goes, it is 'shovel ready' and no debt to boot!

Both projects have a fractional component, a hospitality component and golf courses with other attendant amenities.

In the past I've written about New Orleans. That's on hold now until we determine what really can be done with the site.

At Seahorse Beach Club on the Texas Gulf Coast, we have gained a listing with Sotheby's in Houston, a real coup for us as it is the market leader in Houston, which is our primary market. We have listed homes on a whole unit basis and as a lot and home package. We have also listed lots with another broker to gain more exposure. Fractions will come, but we need to make it to the summer.

Star is currently chasing deals: A San Antonio hotel to add a fractional component, a bulk sale of fractional interests in Telluride, finding a development partner for a Tahoe-area ski resort, and then there's that St. Croix project, the Minnesota Lakes deal and finally a potential Vail, Colorado, fractional deal.

I have not mentioned the 'other' Marathon Key project, Crystal Resort: It is debt free and ready to go with either Marriott Residence Inn plus Gulf front fractional cottages or a full-on condo resort mixed use with whole and fractional units. All we need to do is to arrange construction financing. Keys pro Marvin Rappaport is the honcho for this.

Lots going on, and it's about time!

Catching Up with Carl: December 2014

December, the month of Merry Christmas/Happy Holidays. I'm curious where you come out on these names?

Seahorse Beach Club:

   Last week, we had a full-team Seahorse meeting to assess where we currently are and to make concrete plans for 2015. It was an excellent day and a half. This is the slow time of the year on the Texas Gulf Coast, so many of our decisions will take some months to play out.

   Our main topic was have we over-built our luxury homes on the beach and bay and do we need a second line product? Or, have we just not seen the right prospects yet?

   Because we have not been able to arrange financing for our major amenity, the beach clubhouse and pool, we are really selling with one arm tied behind our backs, as the expression goes.

   Usually, not much gets accomplished during December due to parties and the holidays. No so, as mentioned last month, with us. We are going flat out to improve sales at Seahorse and to get the Florida Keys Resort funded.

Marathon Key:

   The Crystal Cottages project on Marathon is already funded with equity. Now, it's time for the development loan, to start construction and to get into sales. RCI will play a material part in this process.

   The Florida Keys Resort, aka Sombrero Golf Club, with sites for hotel, fractional cottages and new clubhouse, will close next month. We are finalizing the major equity contribution that will allow us to do so. We have transferred our franchise agreement from Crystal to Florida Keys Resort, and still plan to sell the second floor either in a fractional structure or a condo-hotel structure.

   Condo-hotels? The SEC has changed its regulations to allow for a more dynamic presentation of the numbers. With the improving economy and the red hot Keys hotel market, we may have a winner on our hands.

   Where do we go from here? We have a good handful of leads for marketing and/or development. Now comes the tough part—converting the leads into deals.

New Orleans:

   Square #97, about which we've written quite a bit over the past year or so, is in limbo as we have been faced with conflicting information on transient use [hotel, fraction, short-term rentals] and ownership. We may have an 'in person' meeting soon.

Other Deals:

San Antonio, TX – At The Fairmount, we have a proposal before the owner to fractionalize to-be-built condos in and on top of the hotel.

Bear Valley, CA – We have discussed with the new owners the build-out of the village core.

Telluride, CO – We have a proposal for a bulk sale of inventory there in a semi-dormant fractional project.

Wells, ME – Back again after the recession is a wonderful project that will have a golf course, country inn and a fractional component.

The easy part is getting the leads in and organizing them. The tough part is the closing.

Merry Christmas, 

Carl

Catching Up with Carl: November 2014

We are coming upon the Holiday Season. Usually, most work slows down between Thanksgiving and New Year's. Not in our case. If we can get the attention of important participants, here’s what we plan to do:

1. Florida: We are working on two deals. For the Florida Keys Club, we plan to arrange our final financing and move ahead with plans for the fractional cottages and the hotel. At Crystal Cove, we plan to arrange a relationship with RCI for rental, by them and by European travel companies allied with them, to lease a number of condos as the rental market to the Keys is so hot. Then, to begin construction on our first phase, and get into sales.

2. Texas: At our Seahorse Beach Club, during the first week of December we’ll be value engineering our first two homes: one on the Gulf and the other on the Bay with an eye to build and furnish homes that are more competitive with our specific market.

Or, to put it another way, we probably overbuilt and we are adjusting, which should make our selling prices more attractive.

3. New Orleans: We’ve spent a good deal of time fashioning the elements of a venture ‘deal’ there and are finally getting down to what the license can and can’t do in terms of transient use in the Quarter. By year’s end, we’ll either be in one or two projects or none.

4. A lot of projects have come to us for various reasons:

       A] At a Colorado ski area, we are working with the balance of a partially sold-out fractional project. We have submitted a proposal to ‘bulk’ sell the inventory. That proposal has not yet been accepted by the owner.

       B] At a Sierra ski community, recently purchased by a Canadian developer and hotel management company, we are in discussions to find them a development partner to build out the Village core. It's interesting as we managed the pre-sales, back in the mid-2000s, for a condo/fractional project.

      C] A Texas historic hotel with an eye to convert part of the inventory to condos, plus to build condo penthouses all for fractional sales. Our proposal is on their desk.

So, a busy end of the year for us. Our office building in Scottsdale Old Town is still for sale. Any takers?

Catching Up with Carl: October 2014

Just returned from hiking 100 miles on two English trails. Wonderful weather and gorgeous scenery. Also, terrific pubs, food and beer!

At Texas's Seahorse Beach Club,  our grand opening is set for Saturday and Sunday, October 11 and 12. After that weekend, our first Beach Home will be sold out of fractions and we’ll have taken reservations in our first Bay Home, now under construction. We have the local chambers sponsoring the opening and the top real estate agencies bringing their sales teams by before or after the opening based on their sales meeting day.

We are “just” a year behind our original schedule due to a confluence of factors: financing, high-end construction, weather, lack of experience with local contracting for our type of home and the fact that we are building up 19 feet on piers! 

Well, doesn’t everyone build up 19 feet? Sure, but the usual beach house in our area is not the quality of our homes. We have had to blaze new trails at almost every turn of the construction cycle.

So far, the fractional product has been well received. Certainly, a lot of education is needed, but our ace sales manager, Richard Korowicki, has managed that aspect very, very well.

I am very proud of our Star team: Scott Tracy, as project manager, for handling the many, many construction items plus the installation of the FF&E and OS&E; Chris Cannon, our chief marketing officer, has pumped out all sorts of invites, newsletters, website upgrades and—in coordination with our top flight PR agent in Houston, Bernard Kaplan—well-placed articles and releases.

In the Florida Keys, the twists and turns continue in the full financing of the Florida Keys Resort on Marathon Key. We have been successful in extending our closing on the golf club until January 15, 2015. On one hand, the property, bought right and singular by size and uniqueness, should be readily financeable. But we are looking for the ‘just right’ terms and partner. So, that has taken time and some extra expense. The second Marathon Key property, Crystal Bay Resort, is back on track as a mixed-use of either fractions and whole units or a hotel [Marriott franchise] and fractional cottages.

New Orleans is another story. Our team has not been able to bring the right buyer to the table for either of the two projects, and now they are under contract to others. Grand opportunities, but no go. Alas.

Catching Up with Carl: August 2014

The dog days of summer? Not on your life!

At Seahorse Beach Club, www.beachclubatseahorse.com, we are in construction of Bay House #1 with Beach House #1 ready for FF&E and OS&E delivery in early September. We look to close Beach House #1 this fall with its six owners, and Bay #1 soon thereafter. The Beach Club membership program has been slow to launch as we focus on realtor co-op programs.

Soon after closing, the City of Freeport should begin annexation of our area, which will be a boon to our owners. Our Richard Korowicki continues to do a great job as sales director.

September and October will be filled with events for local real estate agents and their clients.

In New York City, all the timeshares, including The Manhattan Club re-sales program, have been ordered to cease selling by the City attorney's office. Some owner complaints about access on their very flexible use plans have caused an election year blow-up. Plus, I am told that the folks in the City attorney's office have not taken the time to understand timeshares in general and use plans in particular. A sign of the times with the new administration?

Yesterday was full of negotiations on some $70 million of project financing for our Florida Keys project. To be candid, this level of equity and debt goes over my head to some extent, but we have a terrific team experienced in that type of transaction, and experienced in development. Marvin Rappaport, Bill Meyer and Peter Rosasco are the champs... wonderful partners all.

New Orleans continues to be elusive. The approval process is embedded in the mayor's office. On one hand, those with the right connections can get approvals. On the other hand, a buyer [or his lender] has a need for certainty, so this process, while it may appeal to insiders, is not what the outsider wants to go through. Our team is moving to solidify the approval process for the shared ownership and/or hotel uses for our listings.

No newsletter in September as I'll be hiking in England.

Catching Up with Carl: June-July 2014

Seahorse Beach Club, located on the Gulf outside of Houston, is really moving now. We're sold four of the six fractions in Beach House #1 and are preparing for construction on Bay House #1, which should trigger the funds to begin the Clubhouse. 

Tiffany Clark, who previously ran operations and marketing at Pronghorn in Bend, Oregon, has joined Seahorse as an operations and club management pro. Pronghorn sold fractions and whole units [up to $3 million each] in addition to having two golf courses and other amenities. A first class deal. As it happens, our Seahorse sales director, Richard Korowicki, came from there, too, after he had sold out the Teton Club in Jackson Hole, Wyoming. 

Down in the Florida Keys, one of the true hot hotel areas in the USA, our Florida Keys Resort is in the final stage of raising the necessary equity and debt to buy the 120-acre property, which includes the golf course. Separately, we have gotten Marathon Key city approvals to sell the 15 fractional cottages and the second floor of the boutique hotel on a lock-off basis. The approvals were never in doubt, but we now have them locked in. Also locked in are the transient zoning units, called ROGOS, necessary for the cottages and the hotel under Florida law. 

Star is getting quite Keys-centric as Marathon Key is also home to the Crystal project, which was to be funded via EB5 but now has other money chasing it. Originally planned were a number of Gulf-front fractional cottages. We hope that the hotel operation will allow them. A number of hospitality companies are closing in on this deal.

Who wants to buy a two-unit office building in Old Town, Scottsdale? Our HQ building is for sale; one half is rented and we occupy the other half. As more of our post-recession business seems to be in the Southeast, we have the building up for sale. It's a really unique structure right in the heart of the dynamic Scottsdale scene. Let me know if there's interest. 

I've written in the past about New Orleans, and the two deals that are part of the brokerage team, and potential JV team. All cities have their 'inside' track to gain approvals, but in NOLA it's a real throwback to the days when if the right team goes into the planning department and the Mayor's office, approvals can be granted in quick time. Too many companies operating through the back door is not what they want to do. This is understood. 

That said, the opportunity is there, especially in the French Quarter, for the developer or other buyer who has nerves of steel and is willing to let the line play out. Real estate in the French Quarter is red hot.

Catching Up with Carl: May 2014

Summer is almost upon us and already schedules are getting amended due to travels.

San Francisco house and condo prices are going off the charts. Condo prices alone were up 19% in the last year. Is SF ready for another fractional project? The Ritz Club sold out some years back, and that has been it. Current prices are more than $1,000 per square foot.

Any thoughts on inventory to convert? Mixed-use is just fine. My estimate is that we would need about 20 units.

At Seahorse Beach Club, Texas, our second home is in the final steps of gaining financing. We knocked down our #1 sale in our beach house so we are off and running. We will establish a fractional market in the greater Houston area soon.

The Beach Club membership campaign is about to launch. That should allow us to get financing for the Club, which is our major amenity.

Down in the Florida Keys, getting some $50 million of financing in place is a tough task. But our good partners, Peter Rosasco, Marvin Rappaport, Bill Meyer, Adam Greenberg and Michael Lapointe, are all up to the task. We are closing in on a couple of fine prospects and should know next week who will win out.

New Orleans continues to be a roller coaster. It is very interesting to me that if one does not know the development nuances of a city like New Orleans, they just don’t get it. All big cities have their quirks and politics. New Orleans has been there so darn long that it has quite a convoluted process to get anything accomplished. Add to that the French Quarter, and one has a very interesting development environment.

Or, to put it another way, when the development window opens, for whatever reason, one better jump through it quickly or lose out big time. Right now, it appears that the NOLA and French Quarter window is opening, and therein is the opportunity.

Had a delightful dinner last week with shared ownership pro and grand lawyer Art Spaulding. He’s moved up from Irvine to San Francisco along with wife Kit and the pooch. It’s good to have a kindred soul in town.

Catching Up with Carl: April 2014

Here we are in the midst of spring. At Seahorse Beach Club on the Texas Gulf Coast, our Beach House #1 is fully framed and the decks are going in. It will be complete in June. Sales are taking off. Good news.

Also at Seahorse, we welcome Tiffany Clark to our management team with a focus on club and PRC management. Tiffany earned her ‘stripes’ at Pronghorn outside of Bend, OR, and before then with HVS out of Colorado. She is a terrific talent.

Down in the Florida Keys on Marathon, our Florida Keys Club continues apace. Equity is being raised, the hotel architect is being selected and the fractional cottages are in final design. We are compiling needs for our site sales and marketing teams. The Keys continue to enjoy unprecedented demand for rentals and our alliance with Brian Schmidt’s Coldwell Banker franchise for the whole Keys gives us not only an excellent lead flow, but a look into the second home demand in the Keys.

New Orleans, the Royal Street property, has continued interest as a timeshare location, and we are closing in on a sale. New Orleans itself is in the midst of a real estate boom.

Check out Tres Santos in Baja California. Our good friend Pat Hanes has joined its management team. We feel that this project, with the master developer in Colorado, is on the forefront of a major trend in resort and residential development—that of sustainability. In Tres’ case, they inked a venture with Colorado State University to have a campus on the project. CSU, as the land grant in Colorado, has a strong history of working in Mexico as well as its own sustainable program on its campus.

With no golf course around as an enticement to sell real estate, the project is making a statement that it is different from all other Baja’s planned developments.

We continue to ask ourselves, is the resort business behind or with the curve of consumer demand?