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Coffee Talk
+ Sour grapes drench
Southwest Florida
If Meritage were a wine varietal, the taste would be pretty sour.
Southwest Florida was on the receiving end of some especially harsh treatment from the CEO of Meritage Homes when the homebuilder reported preliminary results on July 6. Steven J. Hilton blamed intransigent landowners in Southwest Florida for forcing the company to withdraw from the market.
Coffee Talk wonders why Southwest Florida was singled out for the shabby treatment by the nation's 12th largest homebuilder. After all, this area represented only 2% of the Arizona-based company's closings in 2006.
Coffee Talk suspects sour grapes after landowners refused to let Meritage off the hook for options on land the company was only too eager to buy during the residential boom.
Hilton's strategy: When you don't get your way or you made a big mistake, trash the place and blame others when you leave.
Here's what the company says in a news release: "Operations in Ft. Myers/Naples, Florida continue to be significantly challenged and management expects the homebuilding market in Southwest Florida will continue to be severely depressed for the foreseeable future. As a result, the Company believes the goodwill and other intangible assets relating to a February 2005 acquisition in Fort Myers/Naples are impaired, and anticipates recording non-cash, pre-tax charges in the second quarter of 2007 of approximately $28 million relating to these assets."
Hilton is quoted in the news release, saying:
"Southwest Florida has been experiencing some of the most difficult housing market conditions in the country...our year-to-date 2007 home closings in Fort Myers/Naples are down more than 70% from the level a year ago," Hilton says. "We have been unable to renegotiate acceptable terms for existing lot options, which led us to terminate all of our existing option contracts, and we have been unable to acquire new lots at prices that reflect today's market values. Both factors significantly limit this division's available lot inventory."
Waiter: please take this wine back to Arizona.
+ Politician makes
both sides happy
Keith Fitzgerald has only been a state legislator for one session, but the Democrat who doubles as a political science professor at Sarasota-based New College is making friends in some surprising places.
Coffee Talk reported June 29 that Fitzgerald, whose State House District 69 covers parts of Sarasota and Manatee counties, was one of two Gulf Coast-based Democrat representatives to earn a score of 100 in the Florida Chamber of Commerce's annual ranking of Tallassee's most business-friendly politicians; Michael Scionti, a fellow freshman from Tampa, was the other.
Now comes this: The Associated Industries of Florida, one of the more powerful manufacturing and pro-business lobbying groups in the state, gives Fitzgerald a score of 86 when voting its way on business related bills in 2007. And Fitzgerald, reflecting on his first session in Tallahassee, considers State Sen. Mike Bennett, R-Bradenton, a friend, mentor and frequent voting ally.
"I'm a centrist and consensus oriented person," Fitzgerald tells Coffee Talk. "I'm working on solutions, not just playing politics."
But he is, in a sense, playing both sides. Besides the pro-business groups, Fitzgerald, and his voting record, have been recognized by organizations such as the AFL-CIO and the Sierra Club - groups more traditionally associated with backing Democrats. "I don't want to be a walking stereotype," adds Fitzgerald, on the breakdown of certain groups promoting and endorsing candidates from one party over another.
Putting political cliches and stereotypes aside, though, Fitzgerald realizes the recognition he's been receiving from groups on both sides of the political game have people talking. Fitzgerald replaced Donna Clarke in the Legislature, a Republican, and that party plans on putting forth a vigorous fight in 2008, just as it did in 2006, to retake the seat. Former Sarasota School Board member Laura Benson, who unsuccessfully ran against Fitzgerald in 2006, will likely run again in 2008.
+ Chico's Chairman
to the rescue
Michael Weiss, the chairman of Chico's FAS, is coming to the rescue.
Except Chico's shareholders may be disappointed to learn that Weiss is running off to rescue the Express apparel chain, according to a July 9 report by the Wall Street Journal.
Since December, Weiss, 66, has been chairman of Fort Myers-based Chico's FAS, the Fort Myers-based women's apparel retailer. Chico's sales have disappointed investors and the stock recently traded at $24. At its height in 2006, Chico's stock reached $49 a share.
Now, Weiss has been tapped to lead Express after Limited Brands sold 75% of Express to Golden Gate Capital, a private equity firm. Limited is withdrawing from the apparel business.
Charlie Kleman, Chico's chief financial officers, says Weiss will remain as chairman at Chico's but Coffee Talk wonders how he'll split his time.
+ Jabil Circuit stock
rises on rumors
On Tuesday, July 10, shares of Jabil Circuit surged 5.3%, or $1.17, to $23.39, amid speculation that a private-equity firm was interested in the company. The rumor came from hedge-fund sources.
A buyout may be unlikely. The electronic manufacturing services industry tends to be low margin. Jabil's operating margin in its most recent fiscal year was 3.2. Moreover, while some analysts believe that the stock is trading below its value, it will still be difficult for a private-equity firm to justify a purchase.
Since October, Jabil's stock has slipped 23%, largely due to restructuring costs. Investors were concerned that Jabil's internal tinkering would damage its client relationships and erode revenues. But despite naysayers, Jabil has held up fairly well. In the third quarter, Jabil earned 23 cents a share. Analysts were expecting 21 cents. Jabil's jump was padded by sales from its recent acquisition of Taiwan's Green Point Enterprises and its peripheral business.
+ Homebuilder
parties like it's 2003
Lakewood Ranch-based homebuilder Pat Neal is one of several Gulf Coast executives who have been saying for a few months that the cyclical real estate market is showing signs of beginning to make a positive turn in the cycle.
And his company, Neal Communities, continues to back that up: June 2007 sales marked the third straight month the company beat its 2006 sales. The numbers, while not representative of 2005 or 2004, at least prove that the market has some life, Neal says. Still, the company is selling homes at lower prices than it did in the boom years, sometimes as low as 2003. Indeed, some glossy advertisements for Neal properties in Lakewood Ranch carry the banner of "2003 prices."
Last month, the company sold 16 homes at a total price of $6.6 million. That's a 39% increase from June 2006, when it sold 11 homes for $4 million. April 2007 sales were a 53% improvement over April 2006, the company says, while May 2007 sales were more than 300% better than May 2006.
Lower prices are the biggest factor for the overall sales increase, says Neal. He also says the company has been able to stay profitable under the lower prices for a few reasons: First, it bought the land for many of its projects in the 1980s, when prices were considerably lower. What's more, the company says more than 80% of the contractors and sub-contractors it uses have cut prices as well, allowing for deeper discounts in the home price.
+ Fighting the
hometown scam
Florida Chamber of Commerce executives are fanning across the state to push a new Web site to fight the Hometown Democracy movement, www.thehometownscam.com.
"This will be the most expensive campaign in the state," chamber lobbyist Adam Babington told a group of real estate investors in Fort Myers recently. That's because out-of-state organizations are funding both sides of the Hometown Democracy initiative because they consider it a test case after similar movements were defeated in Arizona and Colorado.
The movement is an effort to require land-use changes be voted on by referendum rather than by county commissioners. If successful, developers and builders say it will harm their business.
The Web site includes tips on how to shoo away petition gatherers from private property and how to craft a letter to the local newspaper.
Entrepreneur finally gives up on convention center
Oscar Parsons, the crotchety 85-year-old entrepreneur who has spent the past five years trying to make a go out of a privately owned convention center - think using a garden hose to extinguish a raging warehouse fire - is finally admitting defeat.
Parsons has put the Sarasota Bradenton International Convention Center up for sale, saying he no longer wants to either spend money building it up or time convincing people it can succeed.
Parsons, through Coldwell Banker Commercial brokers Jag Grewal and Michele Fuller, is asking $12 million, or $100 a square foot, for the 120,000-square-foot former Sam's Club near the Sarasota-Bradenton International Airport.
And while Parsons bought the building in 2002 from Wal-Mart for $3 million, he's looking at a loss in a potential sale: He's spent at least $10 million on improving the facility and converting it from a warehouse to a convention center that's hosted the likes of President George W. Bush and a Latin pop star known as the Mexican Madonna. (See Review 8/25/06).
"I got maybe four or five years left to live," the Kentucky-born Parsons tells Coffee Talk, "and I'm no longer going to spend my hours making this work."
Defiant to the end, Parsons declines to blame anything he did or didn't do with the facility. That includes updating the acoustics, roof, lighting, parking and installing 130 mph hurricane proof doors. Parsons also won't lean on the statistical evidence working against him from the start: Nationwide, at least 90% of the private attempts to make convention centers profitable fail, numbers Parsons willingly overlooked when he bought the property.
Instead, Parsons says a convention center could have worked, and could still work, if only Sarasota and Manatee county officials would work together promoting the facility, which is just about halfway between downtown Sarasota and downtown Bradenton. He says tourism officials in both regions didn't work together for the benefit of the region or his convention center.
Actually selling the property doesn't appear to be any easier than trying to make it profitable. Despite Parson's expensive failure, the brokers are marketing the facility as a convention center and are seeking a buyer in that arena.
"The response so far has been selective because of how we have to market it," admits Fuller, one half of the broker team. "It's a niche product."
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