Ibis Group hopes Sarasota office portfolio takes flight through improved tenant relations
John Blatt and his family came into some money when they sold ISI Robotics, their Detroit machine company that had produced America’s first unmanned factory, in 1996.
They couldn’t shake their enduring skepticism of the stock market, though.
Attorney Mike Biber’s Osprey Real Estate Services planned to focus on office properties in Michigan and Florida, where he could, co-incidentally, escape the brutal Michigan winters and fan his passion for golf.
For the Blatts, the southern locale was kismet. Their sister, Cheryl, had migrated to Sarasota earlier. And they trusted Biber.
So while Blatt attended quarterly Osprey investor meetings, he began primarily focusing on more important things, and in 1999, did what nearly every passive real estate investor only ever thinks about: He bought a 17,000-acre cattle ranch in Wyoming, uprooting himself and with him every thing he’d ever known.
“I realized I had spent my entire life inside,” says Blatt, 67. “I was essentially a journeyman machinist. So when the ranch opportunity came along, I went for it.”
"We want to be the best office landlord in Sarasota. If something needs to be done, it’ll be done right. Good enough is not an option.” — John Blatt, CEO, Ibis Group
As a real-life cowboy, Blatt rode a horse between eight and 10 hours a day, sometimes in temperatures that dipped as low as 40 degrees below zero.
“I always thought, in the back of my head, especially as a boy, that I wanted to be a cowboy,” he says. “That was until I realized, and I realized it pretty quickly, that I’d never be tough enough. People have no idea how tough those folks are.”
Just to make life interesting — read: tougher — Blatt insisted that his cows be raised organically, at a time when the green food movement was only beginning to sprout buds. It was how he was going to separate his ranch from the competition.
But there, he ran smack into a series of government rules wrapped in red tape.
“We found it was very hard to produce cattle that could be considered organic back then,” he says. “The restrictions were huge.”
For instance, calves couldn’t be vaccinated if they got sick to be labeled organic. If a calf came down with a cold, a common occurrence during Wyoming winters, it had to be segregated from the herd and treated with a limited supply of medicines.
Pestacides were forbidden, too, which made it harder to grow crops to feed the organic bovine.
After a decade, Blatt decided to move on. He sold the ranch and left Wyoming, turning his attention to Osprey’s portfolio, which by that time had grown to more than 3.5 million square feet, with holdings in Sarasota, Lakewood Ranch, St. Petersburg and Tampa.
When the recession set in, and rents and occupancies dipped, simmering problems among Osprey partners began boiling over.
Before long, Blatt realized that Osprey’s debt was cross-collaterized. Each building loan was tied to another building, and another loan.
Some loans had been bundled as commercial mortgage-backed securities, including the debt on the 13-story Sarasota City Center.
As the economy’s woes deepened, so did the animosity within Osprey. Banks sued the company, then partners sued one another.
Biber was singled out by Webber Investment Co., an Osprey partner, which alleged he had breached contracts and his fiduciary duty to the company.
Webber also filed documents that claimed Biber in 2006 had “committed civil conspiracy to convert or embezzle funds.”
Sometime in 2011, the Osprey interests came together long enough to decide to split the company and its assets. The company sold off more than a dozen buildings, including the 17-story First Central Tower in downtown St. Petersburg in 2014.
Blatt and his family retained several Sarasota properties, including the Sarasota Commerce Center, the Live Oak Commerce Center, the Live Oak Corporate Center I and II.
“We would have loved to kept the Tampa properties in our portfolio, but there was no way to break them out,” Blatt says. “Likewise, we worked hard to keep Sarasota City Center, but its debt was so intertwined with another asset.”
“It was an all-or-nothing scenario,” says Carrie Kaminski, Ibis’ CFO, who joined the company in 2002.
In all, Ibis’ portfolio today contains more than 400,000 square feet, with more than three-quarters of its space in Florida.
Blatt and Kaminski say their mission now is to mend fences with tenants.
“We believe Osprey under-funded our properties and managed them poorly, especially toward the end,” Blatt says. “We’re very concerned Osprey damaged our reputation in the community.”
To atone for the past, Ibis is investing in its assets. Between 2017 and 2019, it expects to spend more than $2.5 million to upgrade roofs, entrances, common areas, lighting and elevators, among other components.
“We want to be the best office landlord in Sarasota,” Blatt says. “If something needs to be done, it’ll be done right. Good enough is not an option.”
“Our goal is to be proactive and responsive,” Kaminski says. “The feedback we’ve gotten is that with Osprey that was not the case.”
To help its cause, Ibis has retrained Ian Black Real Estate to lease several of its buildings, and former Osprey property manager Coatue Cos. for much of the management.
“They’re much more active, much more engaged now,” says Scott Hechlik, Coatue’s owner. “They’re smart business people, and they’re not afraid to spend money if needed to improve an asset. They want to treat tenants the way they would want to be treated.”
Blatt doesn’t rule out eventually adding to Ibis’ portfolio, either. These days, he spends a little more than half the year in Naples, from which he’s able to survey the company’s Sarasota properties frequently.
“We’re really open to anything,” he says.