Kitson & Partners, the developer of Babcock Ranch, a huge Southwest Florida sustainable city project, have bought a stalled high-end community in Naples, Fla., continuing their Florida land-acquisition strategy.
On Monday, Jan. 31, Kitson, a residential and commercial real estate investment and development company based in Palm Beach Gardens, Fla., closed on Tuscany Reserve, a 450-acre high-end golf course community in Naples. The community was originally developed by WCI Communities, which sold it to Bahrain-based Addax Bank in 2008, before WCI entered bankruptcy.
Kitson had been considering purchasing the development, which has 25 existing homeowners and nearly 80% of its infrastructure complete, back in 2008, said Tom Hoban, Kitson’s managing partner.
Sometime in the second quarter of last year, Addax Bank approached Kitson, asking if they were still interested in buying the development. They were, along with several other interested parties, Hoban said. The sale price was not released by Kitson and the records on the sale haven’t been put online yet, but Kitson said they bought the land for “considerably less” than Addax paid more than two years ago.
Syd Kitson said he sees the interest in the development as a positive sign. “We see the market turning and so do a lot of other people,” he said.
No homes were marketed while Addax had the project, but the project was kept in excellent shape, Kitson said.
“They really did a phenomenal job over the last two years of maintaining the quality of this development,” said Kitson. “It was a stalled project, versus a broken project. We’ve seen plenty of broken projects out there. Largely it’s a sea of broken projects.”
Kitson will be revisiting the entire plan for the development as well as product and price over the next few months in conjunction with area builders who are interested in purchasing lots. The property is entitled for 799 homes, but Kitson says the new plan will probably call for about 500, some attached as well as detached product.
The price points are far from worked out, but Hoban says there will still be products that will be priced a $1 million or more as well as more affordable high-end homes. Originally, WCI was marketing some homes that could sell for as much as $4 million.
Kitson also said they plan to open up a dialog with the 25 homeowners who bought in the development at the peak.
Over the past couple years, Kitson has spent a lot of time analyzing the Naples market and has determined that its prices have been less impacted by the market downturn and that demand will be strong in the future, because land there is more limited than in its neighbor Collier County, home of Fort Myers.
“There is very little future supply,” said Kitson. “In the next few years, it will be among the only new home products available in the marketplace.”
Kitson said the Tuscany purchase is not likely to be its last. It’s working on a few others that should consummate in 2011, he said.
Last August Kitson & Partners bought a rare chunk of ready-to-develop property in the middle of Pinellas County, Florida, the state's most densely populated county. Kitson paid a bank $7.9 million for a 60-acre parcel across the street from the Bay Pines Veteran’s (VA) Medical Center there while another $1.5 million was due on a baloon note on the land, according to public records at the time.
In the meantime, Kitson continues working on the development of the 91,000-acre Babcock Ranch, which is planned to become a new city that uses sustainable clean energy.
Kitson said the project has all permits and approvals and final engineering is underway. He’s also recruiting industry and said he has had some interest from a number of large Fortune 500 companies as well as smaller companies that would bring jobs, an element critical to the success of the development.
This spring, Kitson and Florida Light and Power are asking the Florida Legislature for permission to start construction on a solar power plant that would cover 400 acres of the community and generate 75 megawatts of energy. The largest solar plant now in Florida produces 35 megawatts.
Just building the plant would create jobs as early as this summer if the Legislature gives its blessing.
Teresa Burney is a senior editor for Builder magazine.