Skip to main content
Coffee Talk
Business Observer Friday, Dec. 14, 2007 12 years ago

Coffee Talk

Share
Lee County imposes moratorium: Incoming Lee County Commission Chairman Ray Judah had some explaining to do when he appeared before a group of builders and developers recently.Shells goes to the Middle East: It's not where you normally hear about international expansion.Construction firm looks forward to next year: T. Craig Campbell, president of Palmetto-based Zirkelbach Construction, uses phrases like "cautiously optimistic", "hopeful" and "still watching pennies", when predicting what kind of year the company is looking at in 2008. Commercial brokers seek access to TICs: If the National Association of Realtors has its way with federal regulators, some commercial real estate brokers will have another way of making money next year.WCI gets reprieve from lenders: WCI Communities got a one-month extension from lenders to Jan. 7 to renegotiate the terms of its loans. So what?Homebuilder celebrates the holidays with sales: November turned out to be a pretty good month for Lakewood Ranch-based homebuilder Neal Communities.Tampa to get Ritz-Carlton: For years, city and tourism officials have lamented that the Ritz-Carlton's flag hasn't flown over Tampa.

Coffee Talk

+ Lee County

imposes moratorium

Incoming Lee County Commission Chairman Ray Judah had some explaining to do when he appeared before a group of builders and developers recently.

Judah spoke to the Real Estate Investment Society only days after he and fellow commissioners slapped a moratorium on development applications on 83,000 acres in the southeast part of Lee County.

"We really felt we had to take a step back," Judah insisted.

Indeed, Lee County's economy could take a step back because of his decision. Is an economic downturn really the time to be issuing bans on development?

Intentional or not, a moratorium sends a message that Lee County is anti-business and can't manage its growth without halting development. The area, which is now under a new-development ban, is an important source of limestone rock that is an essential ingredient to construction. This is not the kind of message any chamber of commerce wants to be sending out as it seeks to bring new business to town.

What's more, developers grumble that a committee that includes anti-growth proponents - along with a "consultant" - is going to decide where development can and can't occur.

Because mining is critical to Florida's economy, state legislators have threatened to take away the right of local jurisdictions to decide where new mines can or can't be developed. In Lee County, the commissioners may have given it to them on a silver platter.

+ Shells goes

to the Middle East

It's not where you normally hear about international expansion.

Tampa-based Shells Seafood Restaurants Inc. told Coffee Talk this week that it has signed an agreement that will bring 10 new Shells restaurants to several countries in the Middle East during the next decade.

Saudi Arabia-based Food and Entertainment Co., Ltd., which operates numerous restaurants throughout the region, has bought the rights to the Shells brand within a 10-nation territory, and has agreed to open a minimum of 10 Shells restaurants during the next 10 years.

Food and Entertainment has bought exclusive rights to the Shells concept within Saudi Arabia, Egypt, Jordan, Qatar, Oman, Bahrain, United Arab Emirates, Kuwait, Pakistan and India, with an option for future rights to Tunisia and Morocco.

Under the terms of this agreement, Food and Entertainment Co. purchased for $1.7 million over a nine-month period, Shells service marks and proprietary systems for expansion within the territory. Under a separate services agreement, Shells will provide training, operations, menu development and marketing support to Food and Entertainment for the 10-year period.

Shells manages and operates 23 full-service, neighborhood seafood restaurants in Florida.

+ Construction firm looks forward to next year

T. Craig Campbell, president of Palmetto-based Zirkelbach Construction, uses phrases like "cautiously optimistic", "hopeful" and "still watching pennies", when predicting what kind of year the company is looking at in 2008.

Not a banner year by any count, but just about anything would be better than the last half of 2007.

That's when the company, which does mostly commercial construction, saw its yearly revenues shrink from about $44 million to $32 million, in addition to a 30% reduction in the company's workforce, from 30 to 21 employees.

The company even significantly scaled back its annual holiday party, from what used to be a $20,000 or $30,000 affair to a laid-back dinner at founder Alan Zirkelbach's house. "Things have been tough in the third and fourth quarter," Campbell tells Coffee Talk.

And while the executive is referring specifically to Zirkelbach, a 12-year-old company and one of the most prominent private firms in the Greater Bradenton market, he might as well be speaking for the entire Gulf Coast construction industry. Companies from Tampa to Naples share similar stories of suffering and surviving the last half of 2007.

Coffee Talk, though, is emboldened by the details of Campbell's optimism. For starters, the company has already signed four contracts for work starting in the first quarter next year, and Campbell says three other pending deals could be finalized by Christmas. The company is even beginning to refill some positions it cut out earlier this year in anticipation of the work.

The four contracts are geographically spread out and diverse, too. They include a $7.5 million, 18-month project at Honda Cars of Bradenton, where the construction firm will keep the showroom intact while demolishing and rebuilding other areas of the facility; construction of a new furniture warehouse on U.S. 301, a few miles from downtown Sarasota, near the Northgate Plaza; construction of a new SunTrust Bank in Fort Myers; and design and site work on a new medical and law office in Bradenton.

What's more, Campbell, who took over as president of the company in late 2006 after Zirkelbach began focusing on more long-term strategy issues, says several projects delayed this year could become viable next year. One of those is a retail project in Pinellas County.

"It's looking favorable," Campbell says about next year's prospects. "I'm cautiously optimistic we've seen the worst of it."

+ Commercial brokers

seek access to TICs

If the National Association of Realtors has its way with federal regulators, some commercial real estate brokers will have another way of making money next year.

That is if the association is successful in petitioning the Securities & Exchange Commission to exempt commercial brokers from strict rules governing what's known as tenant-in-common sales. A TIC sale, which allows individual investors to pool their money to buy commercial properties and other large real estate holdings, has gained popularity the past few years as an investment option for the high net worth crowd. (See Review 1/26/07.)

But as it stands now, commercial Realtors can't participate in TIC sales, which are governed by the SEC, unless they have a Series 22 or Series 7 stockbroker license. That rule essenatiually forbids the overwhelming majority of commercial real estate brokers from particapting in the TIC market, as cross-licensed professionals are rare, both on the Gulf Coast and nationwide.

The SEC opened the request for public comment late in November, and will likely make a decision on the request by early next year.

The gist of the association's argument is that a TIC purchase is, at its core, a real estate purchase and not stock shares. In its statement to the SEC, the association states that commercial brokers "would provide valuable guidance and assistance to a purchaser because of their extensive training and experience in matters relating to the estate and the predominant role of real estate in a TIC security transaction."

The NAR's exemption proposal comes with its own guidelines. Its application to the SEC specifices that for Realtors to qualify under the exemption, they must have received one of several industry designations, such as being licensed as a Certified Commercial Investment Member (CCIM). Without the designation, the broker, NAR says, must meet certain transaction standards: At least five commercial real estate transactions having an aggregate value of at least $3 million in the prior five years, or at least 10 commercial real estate transactions having an aggregate value of at least $10 million in the prior 10 years.

Sarasota-based commercial real estate lawyer Jefferson Riddell - who participates in TICs as both a licensed Realtor and stockbroker - says the concept of allowing Realtors in on TICs is a good one in theory. The NAR's proposal, though, isn't clear on certain points, Riddell says, such as who is the lead broker when two sides come together on a deal and what stipulations will be put into place to protect investors. "I hope they polish it up," Riddell says, "and then I can completely endorse it."

+ WCI gets reprieve

from lenders

WCI Communities got a one-month extension from lenders to Jan. 7 to renegotiate the terms of its loans.

So what?

It's hard to imagine lenders foreclosing on WCI and forcing the Bonita Springs-based homebuilder into bankruptcy. Lenders don't want to be saddled with residential land and condos whose value is now questionable. As of Sept. 30, WCI had $1.9 billion in debt.

Plus, any bankruptcy filing would wipe out equity holders. That's not likely to happen as long as Carl Icahn has anything to say about it. Icahn is chairman of the company and owns nearly 15% of WCI's stock.

Still, the company's bonds reflect deep skepticism by investors. They're now trading between 50 cents and 60 cents on the dollar.

Hanging in the balance is One Bal Harbour, a giant condo tower that WCI is finishing up in condo-busted Miami Dade County. By Jan. 7, everyone should have a good idea how many buyers will pay for their units and how many will default.

+ Homebuilder celebrates the holidays with sales

November turned out to be a pretty good month for Lakewood Ranch-based homebuilder Neal Communities. The company outsold its November 2006 output by two homes, 14 to 12, and among those sales was the company's 100th for the year - already 12 more sales than all of 2006.

What's more, a trio of agents met an internal sales challenge for the month: Sell three homes before Thanksgiving and win a $500 shopping spree at Saks Fifth Avenue. The company held a drawing among the three sales agents who met the challenge and ultimately awarded the gift certificate to Kelly Reagan, who had sold seven homes last month.

While the Neal Communities news is decidedly good, there is a 'but', as in many ways this is still a slumping housing market. This time, the but is in total sales volume. For example, the value of the 14 Neal Communities homes sold last month was $5.25 million, while the value of the 12 homes the company sold in November 2006 was $7.24 million.

Some of the individual homes, including several town homes sold by Reagan, were reduced by $100,000. "That has a lot to do with why we've had more sales," Reagan tells Coffee Talk.

The lower sales prices seem to be indicative of the reality in the new home market in Sarasota and Bradenton. John Cannon, who runs another self-titled Lakewood Ranch homebuilding firm, recently told the Review his company is following the buyers, who, almost unanimously, are holding out for lower prices.

Tampa to get

Ritz-Carlton

For years, city and tourism officials have lamented that the Ritz-Carlton's flag hasn't flown over Tampa.

Now they are celebrating the news that plans are on track for the city to land its first Ritz hotel as soon as 2011.

Ritz-Carlton officials intend to soon announce their plans to open a 269-room hotel on the Courtney Campbell Parkway at Rocky Point Drive. The project also will include 176 luxury residential units, retail space and a marina, according to information from the hotel chain.

Developers hope it becomes the area's first five-star hotel, and tourism leaders hope a high-class hotel attracts more events, conventions and visitors to the Tampa Bay area.

The Tampa Ritz will be the 10th Ritz-Carlton in Florida. The project will be developed by Clearwater-based Orion Communities and R.L. Pearson & Associates.

John Grandoff, an attorney working on the project, says he is discussing marina details with the Port Authority. He said he expects the marina to be permitted by mid 2008. The hotel also will include 30,000 square feet of event space, including a 12,000-square-foot ballroom.

Atop seven floors of hotel rooms will be 44 residential units. An adjacent 19-story second tower will include 132 residential units. The average floor plan is 2,800 square feet. The Radisson Bay Harbor hotel will be torn down to make room for the development.

Steve Hayes, executive vice president of Tampa Bay & Company, the area's convention and visitors bureau, says the Ritz will be a welcome addition to an area seeing substantial hotel development. Currently, 20,500 hotel rooms exist countywide.

Related Stories

Advertisement