Atlanta businessman Wayne Morehead is cutting his development teeth on what will become the largest project in downtown Sarasota.
On the Boulevard
Atlanta businessman Wayne Morehead is cutting his development teeth on what will become the largest project in downtown Sarasota.
By Kendall Jones
In less than five years, The Boulevard will be the largest development project in downtown Sarasota. When complete, the project will have up to 15 buildings holding about 400 residential units, more than 80,000 square feet of commercial space and more than 1,000 parking spaces, all linked by an outdoor plaza walkway marked by numerous water features. Spanning more than two city blocks and about eight acres at Central Avenue and the Boulevard of the Arts, it will be a community within the community - an expansion of the historic Rosemary District.
The Atlanta developer of the Boulevard is someone you probably never heard of ¦ yet. In fact, this massive project is his first undertaking as a developer. This is one confident man.
Meet Wayne Morehead.
Morehead, 50, was financially successful in the nursing home and assisted living industry, mostly in Florida. But the ever-weightier regulations and customer-satisfaction issues of that industry wore him down. He wanted to diversify. He formed his development company, Khason Development, a couple of years ago and began looking for the right project.
It took him a while, but he says The Boulevard is that project.
Morehead has distinct memories of the racial tensions that impacted his youth. He grew up in Inkster, Mich., just outside of Detroit, the middle of three children. His father, James, was a pipe fitter with the Ford Motor Co. for more than 30 years.
Morehead's father started on the Ford assembly line, but he was pulled off the line and put into the skilled tradesman program because he had taken about a year of college classes prior to being drafted. As a result, the elder Morehead was able to provide his family with a better living than he would have as an assembly worker.
Morehead attended a segregated high school. "There were 800 or 900 students in my class, but only one of them was a white guy," recalls Morehead. "And his name was James Brothers, of all things. He goes back to all the high school reunions, and he's the only one who always gets applauded."
But it was during the family's annual travels to Florida in the '60s and '70s when Morehead felt the sting of racism most. The elder Morehead grew up on his father's tobacco farm on 162.5 acres in Lake City, which the family still owns. Every summer, the Morehead family piled into their car, rolled down the windows and drove to Lake City.
On the farm, Morehead and his older brother were put to work picking tobacco. They worked alongside laborers who were paid maybe $5 per day. "They were paid pitifully," recalls Morehead. "But they were lucky. I was an ¦ 'heir'¦ so I didn't get paid anything. I was the youngest one out there, though, so I got to drive the tractor, which was a treat. Before my grandfather got a tractor, it was all mule-driven. Sometimes my grandfather would slaughter a cow or a hog for us, which was a real treat."
It was in Lake City that young Wayne first saw a water fountain with the word "white" on it. Thinking that must have been the name of the manufacturer, he drank from it; he quickly received a scolding from his father.
He remembers his parents' reluctance to stop in many places on the drive to and from Florida, fearing for the family's safety. When they got poor service in restaurants, his parents assumed it was because of their race; they were surprised when they could stay in certain motels. They always tried to stop in Atlanta, because it was considered a "safe haven."
Once, in Tennessee, they stopped for a fill-up at a gas station, then all full-service stations. It was not until they had to stop for the next fill-up that they realized the gas station attendant in Tennessee had placed a Ku Klux Klan sticker on the back of the car, and they had been riding with it on, in ignorance, for hours.
Morehead admits that the experiences inured in him a segregated mindset, a distrust or dislike of white people. He remembers his father telling him then that he was wrong, but it was years before he realized that.
Getting business experience
Morehead graduated from Michigan State University in 1974 with a degree in marketing, and again in 1976 with an M.B.A. in finance. Morehead's college expenses were paid through scholarships, stipends and his father.
"My father is the best man I've ever met," says Morehead. "Only one time did he need to say, 'Just don't waste my money.' I really cut it thin for myself. I would only ask him for the minimum I needed for real necessities. I didn't ask for money for clothes or things like that. When I went home, my father would say, 'Don't you need some clothes?' and I always said no. But when I left to return to school, my father would give me some spending money. Then my mother would put even more money in my pocket and say, 'Don't you tell your father than I'm doing this.'"
After graduating, Morehead joined General Telegraph's executive development program, which moved him to different locations for six months each. His first and third locations were in Michigan, but the second location was in Tampa, a move that may have changed the direction of his life. While in Tampa in the summer of 1977, Morehead met Sandy, who became his wife.
After the 18-month executive development program was complete, General Telegraph placed Morehead in his permanent assignment, in Santa Monica, Calif. Says Morehead: "In the summer of 1978, Sandy came and got me out of Los Angeles and took me back to Miami, to her home."
They married in 1979 and moved to Charlotte, N.C., where Morehead worked for First Union's marketing department as a products manager for the consumer banking division. After five more years, Morehead had obtained his Series 7 securities license, and the couple moved to Atlanta, where Morehead worked in financial and investment planning.
In 1985, Morehead formed an investment firm with two partners. One year later, Morehead and one of those partners, Michael Brown, formed a company called Healthcare Capital with a third partner, Pete Green. Explaining the formation of Healthcare Capital, Morehead says he and Brown "felt we were sort of middling it before. We took money from investors and gave it to someone else. We would rather be the equity principles, and if we could do that job well, it would become an equity asset and a continuous stream of cash flow. We knew a lot about the graying of America, and we knew this would be a good demographic."
Healthcare Capital was in the nursing home business - it bought and leased nursing home properties, mostly with third party managers. The company later brought in a team to develop a nursing home management component as well.
Morehead was the company's executive vice president of acquisitions. By the mid-1990s, the company controlled 60 properties in 11 states. Of those, about 40 were managed by Healthcare Capital, but owned by others. The rest were owned or leased by Healthcare Capital. Healthcare Capital had an opportunity to joint venture with one of the main companies for which it managed nursing homes, but Morehead and his partners decided not to do it for fear of losing control of the entity.
Instead, they downsized their company by allowing a buyout of their contracts on the 40 properties they managed for others. With the buyout proceeds, they made other acquisitions and became a more efficient company, he says.
In 1998, Brown bought out his business partners, including Morehead, in an amicable split. Morehead and his family moved to Tampa, where he began his next, and continuing, venture.
Khason is born
In Tampa, Morehead was ready to begin a new entrepreneurial venture in the industry he knew so well - assisted living. He formed Khason Inc., the parent holding company to all of his subsequent ventures. Khason is named for his two sons, Khalen, 13, and Janson, 16.
Initially, Khason had three sub-entities: Khason Management Services, manager of nursing home properties; Khason Residential, developer of nursing home properties; and Khason Enterprises, owner of adult and assisted living homes.
Then Morehead heard about an opportunity to purchase Mariner Home Health of Florida. He bought the Florida operations himself in 1999 and changed the name to Access Home Health. The company was licensed and Medicare-certified to provide home health services from Hillsborough to Manatee County and across the state to Lakeland, Orlando, Melbourne, Port St. Lucie, and ultimately, Palm Beach.
But the Khason companies had a lot of business in Georgia, so Morehead was traveling back and forth between Florida and Georgia a lot. Finally, he decided it would be best to just move his family back to Atlanta, which he did in 2000. When he returned to Atlanta, he formed Khason Development and started to look for good development opportunities.
"The assisted living industry is a tough industry," says Morehead. "I enjoyed the work, but the regulations are tough, and it can be hard to satisfy the personal concerns of patients, employees and patients' families. I wanted to diversify, and I always had an interest in construction and architecture."
Though he has looked, he has not yet found the right project in the Atlanta area. "I came close a few times to doing some projects, but there was always some hair on it, and they didn't work out."
In the meantime, Morehead sold Access Home Health to Charlotte, N.C.-based Capital Health Management Group on Feb. 13, 2002. Morehead remained president of Access Home Health and joined the board of CHMG, which he says is ranked as one of the 50 fastest growing companies in Charlotte. CHMG approached Morehead about the acquisition, which Morehead will only say was financially very good for him, without disclosing specifics.
The right project in Sarasota
Last year, Bob Andrews of Stuart-based Gateway Building and Design called Morehead to tell him of an opportunity in downtown Sarasota. Andrews and Morehead had become friends when they were brought together by a third party to consider a previous Sarasota project. "He was brought in as an investor and I was brought in as the general contractor," says Andrews. "I called him and told him I didn't think the project was in his best interest, that I didn't think we should invest his money or my time in it. It's rare for a contractor to give up a job, but that's how we became good friends."
Andrews' honesty made Morehead interested in this new project. "I was always impressed with Sarasota, and I really like some of the developments going up in downtown," says Morehead. "I went down to Sarasota and looked at it. I investigated it, did my due diligence, and decided it was right."
He first purchased parcels that caddy-corner straddle the intersection of Boulevard of the Arts and Cocoanut Avenue - the intersection with the large circular brick paver design in the street. The first phase of the project, originally called Portofino and now called The Boulevard, will go on the smaller parcel at that intersection. It has gotten through the city's design review and is now before the planning board.
That first phase of The Boulevard is a mixed-use building currently shown with three levels of undercover, or disguised, parking and five levels of condominiums with seven condos on each floor. The project also shows about 4,000 square feet of retail space. (See rendering). Andrews predicts the total construction cost for that building might be about $16 million; Morehead predicts the sellout on the building will be more than $20 million.
The rendering may change slightly before the groundbreaking, expected to take place in the first quarter of 2004. Morehead says he may change the design to two levels of parking, and he may reconfigure the residential units to change the size of some. Price points for the condominiums in this first phase of The Boulevard start in the mid-$400,000s; Louise Guido of Waterside Realty is handling the sales.
The second phase of The Boulevard, up to 13 buildings on about 7.4 acres, will likely have a construction cost of more than $120 million. But it will go up in phases, with each phase of the project paying for the next one, preventing Morehead from becoming financially overloaded. Andrews describes it as essentially a series of freestanding projects, so it is "not as severe as it appears."
The second phase required assembly of about eight or nine parcels, which Morehead is now completing. He is purchasing some with mortgages, some with investors, and some parcels on his own.
"This is a hell of a project," says Andrews. "It complies with what the city it looking for, and it brings a quality project north of Fruitville Road. It's a great opportunity to assemble land and have a theme going through. Plus, the ability to get zoning is critical. This is the last of the 50-unit-per-acre zoning. The rest in town are 25 units per acre, which drives costs up so high you can't reach these price points. I like working with Wayne because he has an M.B.A. and a banking background. He can understand the flow of dollars through the project."
Andrews adds: "The symphony accelerated this a little more than I would have liked. We could have been a little more quiet about it, but when the symphony discussions were happening, the media got involved."
The Florida West Coast Symphony had approached Morehead's representatives to discuss the possibility of locating a symphony hall on the larger parcel. After numerous discussions, both parties decided those plans didn't make sense. Morehead won't admit it, but from a simple glance at his plans, it's clear he can make more money with the current building plans and without the symphony.
Moving back to Florida
Morehead laughs at the irony - he moved from Tampa to Atlanta because of his frequent travel to Atlanta. Now that his family is in Atlanta, he's most frequently traveling to Sarasota. He is considering a move to Sarasota, but likely not until his son Janson graduates from high school. That will be just before Khalen begins high school, so the timing would be good.
In the meantime, Morehead enjoys taking Khalen, a basketball fan, to Atlanta Hawks games. Janson is obsessed with cars, so Morehead takes him to the car shows that come to Atlanta. "When my friends want to buy a new car, they call and ask to speak to Janson," laughs Morehead. "Not only does Janson know all about the cars, he probably can give them a brochure on them."
Mrs. Morehead has finished a bible study fellowship and has begun teaching bible study classes. Both Morehead and his wife are on the committee to revitalize their church in Tucker, Ga.
Morehead's faith has a role in his professional life. Asked what important business lessons he's learned over the years, he replies: "I have had some dark nights in my other businesses over the years, and in the end the problem got solved when I rolled up my sleeves and did it myself. My father used to say, 'the best helping hand is at the end of your own arm.' Responsibility begins and ends with me¦. And it's OK to pray, too."