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Business Observer Friday, Aug. 19, 2016 3 years ago

Full circle

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J. Mark Stroud has worked with some of the top developers in the region. Now, he's back working mainly for himself.
by: Kevin McQuaid Commercial Real Estate Editor

J. Mark Stroud has spent his career working himself out of one real estate job after another, with some of the most prominent commercial owners and developers along the Gulf Coast.

Along the way, he's sold one of downtown St. Petersburg's most high-profile blocks, including 100 First Ave. N., where the Kolter Group is constructing One St. Petersburg, a 41-story hotel, retail and luxury condo tower that will be the city's tallest structure when completed in 2018.

He's also the broker of record on a deal that could fetch more than $16 million, for the sale of a block at 400 Central Ave. in downtown St. Petersburg. That sale, to a New York-based billionaire, is expected to close by the end of the year.

But Stroud's main preoccupation at present is south of the city, on Tierra Verde, with a project that has brought him full circle. There, Stroud and a group of long-time friends and colleagues are building Sunset Pointe at Collany Key, a 136-unit luxury waterfront condominium complex on 18 acres.

When completed, Sunset Pointe will contain four buildings and a smattering of townhomes. The first of the four is under construction, with 28 of 30 units sold, at prices around $1 million each. It's slated for completion next year. Stroud and company also are readying the foundation for a second building soon; they plan to start marketing its units this fall.

If the sales pace continues at Sunset Pointe, he'll work himself out of that project before too long, as well.

Standing on the property, overlooking a semi-private beach adjacent to Shell Key, an 1,800-acre preserve with miles of pristine sand, Stroud laughs at the thought.

At 55, he might not mind so much. It would leave him more time for the Johns Hopkins All Children's Hospital, whose board he now chairs and with whom he has been involved for more than two decades.

During his tenure, the health care provider has built an entirely new hospital and is today constructing a roughly $100 million research and education building. The seven-story building, slated for completion in 2018, will house research for the hospital's pediatric heart, cancer and blood disorder, fetal and neonatal institutes; brain protection sciences center; and contain a 250-seat auditorium.

“Right now, I'm just thrilled to be doing my own thing again,” Stroud says.

Whether by accident or design, it hasn't often been that way.

A St. Petersburg native, Stroud's father worked in the real estate business before specialization became common. He developed condos, brokered deals, did bank workouts and managed commercial property.

Stroud and his sister, Leslie, became smitten with the business over family dinner conversations. After graduating from Florida State, Stroud began providing real estate appraisals with his sister, working for himself.

Their timing was good. By the mid-1980s, the federal Resolution Trust Corp. and FDIC were waist deep in real estate that had been foreclosed on and repossessed from delinquent borrowers. To properly value their holdings, the agencies required a lot of appraisals.

Pretty soon, though, appraisal clients began asking him to lease some of their investments or keep tabs on others, including a Tierra Verde resort developed by big band leader Guy Lombardo. He drilled down on marinas, and became an expert witness in eminent domain lawsuits.

Stroud's name got around. So did his reputation as a straight shooter.

“The way I always looked at the business, trust was 99% of it,” Stroud says. “To be an honest guy, to do what I said I'd do, meant everything. And I always felt like if I had enough time, I could figure something out.”

In 1996, a friend named Darryl LeClair called with an interesting proposition. The state's second-largest utility was spinning off the real estate development arm that had built the 27-story One Progress Plaza --┬átoday's Priatek Plaza — the 250-slip Harborage Marina at Bayboro, McNulty Station, the 430-acre Carillon Business Center and a dozen other commercial projects.

Would Stroud be interested in coming on board to complete some projects and start others for Florida Progress Corp.?

“It was a portfolio of quality assets, a fast-moving environment and smart people,” Stroud says of Echelon International Corp., the company Florida Progress spun off. He was named president and CEO of Echelon Real Estate Services LLC in 2000, a job he'd hold for four years.

While there, he built the first successful downtown condo project in St. Petersburg, a parking garage, oversaw office developments and the marina.

But when hundreds of millions of dollars of mezzanine debt came due, Stroud suddenly was faced with selling off much of the portfolio he'd built.

“I learned a lot about property while at Echelon,” he says now. “I learned that you can't merely throw a sign on a property and expect people to come to you. You have to act like it's your project and you're going to buy it.”

Making connections
Stints with Michigan-based Osprey Real Estate Management and Boston-based Marcus Partners Inc. followed over the next decade. Both groups were interested in expanding into Florida.

Osprey, where Stroud was COO, invested in office buildings in Sarasota and St. Petersburg, including the 13-story Sarasota City Center downtown. Marcus, which had a $250 million fund to buy real estate, let Stroud buy office and medical buildings in Naples and a tower on the campus of Sarasota Memorial Hospital, among other projects.

A second Marcus fund wasn't so ambitious, though: Partners decided to limit investments to the Northeast.

Rick Baker, Stroud's fraternity brother at Florida State and St. Petersburg's former mayor, asked around that time if Stroud would be willing to join him in working with entrepreneur Bill Edwards, who was in the process of recasting a moribund retail complex into Sundial.

As president of the newly formed Edwards Real Estate Group, Stroud went after a long-vacant downtown block known as the “Tropicana site,” a tract he'd considered buying for Marcus Partners.

He eventually put it under contract for around $12 million.

Stroud and his team considered condos, a hotel, offices and other uses. They did surveys, conducted studies, drew up plans.

Edwards wasn't interested. He told Stroud to sell the site, preferably before his own deal to acquire it would close.

Crestfallen, Stroud started marketing the land. At a conference he met Bobby Julien, the head of the Kolter Group, a Palm Beach Gardens firm that was bullish on Florida and was looking to acquire urban tracts.

Within three weeks, they had a deal. For good measure, Kolter adopted some of the development ideas Stroud had formulated for the site in designing One St. Petersburg, which when completed in 2018 will be St. Petersburg's tallest structure, at 41 stories.

“None of his success is an accident,” says Bob Vail, president of Kolter's urban division, which is building One St. Petersburg. “We were the buyer, but he really got in the middle of the deal and helped both sides in the transaction. Mark was able to explain the entitlements associated with the property, the zoning, its history, and what could be accomplished there. We fully intend to try and do more business with Mark going forward.”

Deal maker
Shortly after the $17.25 million land deal closed, Stroud received a call from the Pheil family, who owned a block fronting Central Avenue in downtown St. Petersburg that contained a crumbling garage and the former Pheil Hotel, which had been vacant for a decade.

After years of squabbles with a partner, the family was in the final stages of negotiating a settlement to consolidate ownership with a goal of then selling the 2.23-acre tract.

Stroud knew the property in the 400 block of Central Avenue well. In addition to being one of the most coveted development sites in the Tampa Bay area, he'd worked for several years as a consultant to the family on the tract.

He'd even started a file for a possible acquisition while at Echelon, and made a run at buying it for Osprey, but a tangled web of owners and leases made the tract too messy a deal to pursue.

Ultimately, Stroud helped persuade Gramercy Property Trust Inc. to sell a lease interest it had in the property to the Pheil family. At the same time, he had environmental testing done so any sale could move more quickly if full ownership was attained.

With the ownership issue settled, the family retained Stroud to market the site. He received more than a dozen written offers on the block, with New York-based Red Apple Group emerging as the buyer.

Red Apple, led by Gristedes grocery chain owner and billionaire John Catsimatidis, is expected to pay about $16 million for the site when demolition is completed later this year.

Like Kolter, Red Apple officials say Stroud was a pivotal and unbiased participant in the sale.

“He was essential in getting this deal done,” Red Apple development manager Ralph Zirinsky says of Stroud. “He was a great broker, really top of the class. This was a very complicated transaction, but he knew the fundamentals of the deal and the market well.”

Red Apple is considering a mix of hotel rooms, offices and residences for the site, which could rival Kolter's One St. Petersburg in height.

Not surprisingly, Stroud has gotten more than a few phone calls since the Pheil site went under contract, from property owners interested in selling their own parcels for eight-figure sums. He's turned them all down.

“My commitment right now is to the Pheil family, to getting the deal closed,” Stroud says. “I have that to focus on, the hospital and Sunset Pointe. It's more than enough.”

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