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Business Observer Friday, Oct. 28, 2005 12 years ago

Real Estate Briefs (Tampa)

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Bill Hood Sells SDP Center to Dallas GroupKB Home pays $17 million for Apollo Beach propertyIndian Shores restaurant sells in $18 million dealHialeah investors acquire third multifamily propertyLucca Development obtains $27 million for condo project
by: Adam Hughes Staff Writer

Real Estate Briefs (Tampa)

Bill Hood Sells SDP Center to Dallas Group

By the time he purchased the headquarters building six years ago, Bill Hood had built Special Data Processing Corp. into a $100 million-plus revenue producer.

The purchase of the 192,000 square-foot building in 1999 was a good deal for Hood. The telemarketing industry entrepreneur paid about $31 a square foot for the site at 16120 U.S. 19 N.

That figure pales in comparison to the price Hood received when he recently sold the headquarters to a Dallas-based investment group: The building sold for about $128 a square-foot.

Earlier this month, Hood sold the building and nearly 11 acres for about $26.4 million in a sale-leaseback deal to a group of investors headed by Rainier Capital Management LP. It's a Dallas company that specializes in tenant-in-common and 1031 tax exchange deals.

At the headquarters site, the Largo telemarketing firm operates a 1,200-seat call center. The company claims in marketing materials it receives around a million inbound calls each month.

Hood founded the telemarketing company in 1984 with five employees and produced first year net revenue of about $1.2 million. It now produces about $120 million a year and has about 1,650 employees.

About six years ago, Hood sold a majority interest in the telemarketing company to Willis Stein & Partners, the Chicago equity investment firm. He remained with the firm as chairman and CEO.

Earlier this year, he put the Largo property on the market. It became too valuable not to sell.

"With the timing and the appreciation, and the market being so rich right now, it made sense for me to diversify," he says. "I don't know if we're at the top of the market. Between diversification and timing of the market, I thought it was right for my portfolio."

Hood didn't disclose how he intends to reinvest the earnings.

"I have been known to speculate in real estate," Hood says. "I have some in Hernando and in Lake Tarpon. Real estate is a good market. You just have to be a lot pickier."

The acquisition is a structured tenant-in-common deal, says Ken Dunn, Rainier Capital's founding president and CEO. Such deals allow investors to defer capital gains tax liability on property sales through exchanges governed by the Internal Revenue Code.

In this deal, Dunn says, a group of unaffiliated investors throughout the country sold ownerships in other real estate and then invested their taxable proceeds into a Rainier tenant-in-common agreement.

Under terms of this deal, a corporate affiliate of Rainier Capital acquired an 11.008% majority interest in the Largo property. The individual investors, through limited liability corporations, took stakes from as low as 0.896% to as high as 10.695%.

This deal reflects the investors' confidence in the Tampa Bay market, Dunn says. Last year, for instance, the company and its investment partners acquired nearly $300 million in commercial real estate throughout the country.

"It's a great market, a tight market," Dunn says about the Tampa Bay area. "There's no significant land to develop into new product. If you do find it, the impact fees are pretty difficult to overcome."

The investment partnership financed the deal with nearly $17.9 million in mortgage proceeds through Bank of America.

KB Home pays $17 million

for Apollo Beach property

BUYER: KB Home Tampa LLC, Tampa

SELLER: Sandler at Harbour Isle LLC, Coral Gables

PROPERTY: Includes 241 lots in Harbour Isles, Apollo Beach.

PRICE: $17,345,000

PRIOR SALE: $4,289,800, September 2002

LAW FIRM ON DEED: Broad & Cassel PA, Orlando

PLANS, DESCRIPTION: KB Home Tampa LLC has acquired at least 241 homebuilding lots in the Apollo Beach community of Harbour Isles for about $17.3 million.

The subsidiary of Los Angeles-based KB Home, a publicly traded company, purchased the site along U.S. 41 from Sandler at Harbour Isle LLC, a Virginia Beach, Va., company that lists Nathan D. Benson as its manager.

On its Web site, KB Home Tampa advertises new home sales in Harbour Isles at prices beginning in the $80,000s. That makes it unlikely the company purchased only the 241 lots at about $72,000 each from Benson's company.

It's unclear from land records whether the deal includes an adjoining 108-acre development site that Benson's company also owned. No one from the company's Tampa office responded to a request for information.

Benson's company purchased the site in September 2002 for nearly $4.3 million from Ruskin's Peg D Corp., a company controlled by the Edward Dickman family.

Indian Shores restaurant

sells in $18 million deal

BUYER: Atlantis West Development LLC, Seminole

SELLER: Donald N. Cate and Agnes E. Rice, Treasure Island

PROPERTY: 19915 Gulf Blvd., Indian Shores

PRICE: Two separate sales: $11,866,700 and $5,933,400

PRIOR SALE: Unavailable

TITLE COMPANY ON DEED: Seminole Title Co., Seminole

PLANS, DESCRIPTION: Multifamily developer Bill Karns has acquired at least 2.4 acres in Indian Shores in two related deals worth $17.8 million. The fee-simple deed transfer includes the Fathoms Island Grill, a restaurant once known as the Hungry Fisherman.

Atlantis West Development LLC, an affiliate of William Karns Enterprises Inc., paid almost $11.9 million for the restaurant site at 19915 Gulf Blvd. That deal included six lots on about 2.4 acres and 0.3 acres of submerged land.

Donald N. Cate, as trustee, and Agnes E. Rice sold the property to Karns' Seminole-based company. Corporate records list Cate, Rice and Sam Maisano as the restaurant's owners. The restaurant no longer is in business.

In a related deal, Atlantis West purchased three adjoining lots from Rice for about $5.9 million. It's uncertain what plans Karns has in mind for the property. He was unavailable for comment.

Hialeah investors acquire

third multifamily property

BUYER: Indian Palms Holdings LLC, Hialeah

SELLER: 21 Century Largo LLC, Southfield, Mich.

PROPERTY: 13300 Walsingham Road, Largo

PRICE: $14,932,000

PRIOR SALE: $6,250,000 in 1983

LAW FIRM ON DEED: Greenberg Traurig PA, Miami

PLANS, DESCRIPTION: A Hialeah investment group managed by Miguel Soto has acquired its third multifamily property in the Tampa Bay area. Soto is an officer in Hialeah's family-owned Queen Contract Interiors Inc., a wholesale-retail flooring distributor.

Indian Palms Holdings LLC, an affiliate of Soto's MGC 176 Holdings Group LLC, paid nearly $15 million late last month for the 176 units in Largo's Indian Palms apartments at 13300 Walsingham Road. That's $84,840 each for units in 22 buildings constructed around 1974.

Soto's investment group paid nearly 139% more than the seller original paid for the property. The seller, 21 Century Largo LLC, purchased the property in 1983 for nearly $6.3 million.

To finance the deal, the investment group secured a $12.3 million mortgage through the Miami office of U.S. Century Bank.

This is the third multifamily purchase this year for the Hialeah investment group.

The affiliated 5221 Bayshore LLC recently paid $6.4 million, or about $100,000 a unit, for a 64-unit rental property at 5221 S. Bayshore Blvd., Tampa. The buyer is an affiliate of MGCJ 64 Holdings Group LLC, which lists Soto as manager.

The purchase price in that deal was about 392% more than what the seller paid for the 29-year-old property. Park Point Properties Inc., a Tampa company controlled by Albert M. Salem III, bought the property in July 1996 for $1.3 million.

The buyer financed the transaction with nearly $5.8 million in mortgage proceeds through Premier American Bank.

Earlier this year, three other affiliates that list Soto as a manager purchased properties in Tampa.

The affiliated Palma Ceia LLC paid nearly $3.5 million in May for a 52-unit apartment property at 3206 W. Azeele St., Palma Ceia, and MGCJ 52 Holdings Group LLC financed that deal for about $3.5 million through TotalBank.

MGCJ Holdings Group LLC and MGCJ Renmah Holdings Group LLC, two other affiliates, purchased two commercial parking lots earlier this year. In March, they paid nearly $2.5 million for the lots at 2120 and 2127 Dekle Ave.

Lucca Development obtains

$27 million for condo project

BORROWER: Fifth South LLC and Lucca Development LLC, Chicago

LENDER: Fremont Investment & Loan and American Mortgage Acceptance Co.

PROPERTY: Lots along Coronado Drive and South Gulfview Boulevard, Clearwater Beach

AMOUNT: Two mortgages: $21,565,000 and $5,800,000

LAW FIRM ON MORTGAGE: Riemer & Braunstein LLP, Boston, for American Mortgage

PLANS, DESCRIPTION: First-phase work on the Marbella should begin soon now that Luke Castrogiovanni has secured additional financing for the Clearwater Beach condominium project.

The Chicago developer's Fifth South LLC and Lucca Development LLC recently secured two loans for the 102 condos proposed for phase one. The companies obtained nearly $21.6 million in financing through Fremont Investment & Loan, a California-based real estate lender, and $5.8 million through New York's American Mortgage Acceptance Co.

The loans coincide with the $10.3 million purchase last month of the Howard Johnson Express Inn, 325 S. Gulfview Blvd., and Roma Motel, 326 Coronado, from Americana Gulf Motels Ltd. Earlier this year, he purchased the nearby Tropicana and Albatross motels on Hamden Drive.

This summer Castrogiovanni earned city approval to build 92 condo units in a 15-story tower on the Howard Johnson site and 10 separate units on the Tropicana parcel. If all goes well, he envisions the possibility of another 49 units in phase two.

While hesitant to talk about total project cost, Castrogiovanni said in a recent interview it should cost about $300 a square foot to produce the 102 condos.

However, he's bracing for cost increases because of a projected increase in building demand throughout the hurricane-ravaged areas of the Gulf Coast.

"It's a very fluid situation," he says. "Fortunately, selling prices on the beach are helping us out."

Over the past several months, he says, sales of some luxury condo units on the beach have risen to almost $800 a square foot.

- David R. Corder

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