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Syd Kitson says he never tires of talking about Babcock Ranch, even though he'd probably rather discuss Talis Park, the new residential community that recently opened in Collier County.
Kitson and Morgan Stanley acquired the sprawling 91,000-acre ranch that straddles the border of Charlotte and Lee counties in July 2006 for an undisclosed sum, selling most of it to the state for preservation for $350 million and keeping 17,000 acres for what will be a residential community of 20,000 homes and 6 million square feet of commercial space.
Seven years later, Babcock remains in the same state as when Kitson acquired it: There's a working ranch, a sod farm and thousands of acres of pristine Florida pine scrub.
You'd think Kitson would get tired of the questions about when development will start on the land he controls now, but he doesn't. “We're very fortunate we didn't start,” says the former National Football League player who played for the Green Bay Packers and Dallas Cowboys.
Indeed, the residential real estate downturn proved to be longer and deeper than anyone imagined, and Kitson says he's fortunate his company didn't put more money into the ground building roads and expensive infrastructure. “That's hard to recover from,” he says.
As it was, Evergreen Real Estate Partners bought out Morgan Stanley's stake in the deal. Together with Kitson, Evergreen bought the debt at a discount in the depth of the downturn, saving the project from an uncertain fate.
Now, Kitson says infrastructure construction such as roads could start late this year or in 2014. It has earned a designation as an independent special district that can sell bonds, much like the Reedy Creek Improvement District, the governing authority that controls the Disney property in Orlando. “There are multiple funding options right now that we're exploring,” he says, declining to divulge more details.
While Babcock Ranch is Kitson's sleeping giant, the West Palm Beach-based developer has scored wins on other, smaller projects in Collier and Pinellas counties.
In Collier County, Kitson acquired Talis Park, a residential development on Livingston Road just south of the Lee County line where WCI Communities had originally planned to develop Tuscany Reserve during the boom.
By the time they sold it to Bahrain-based Addax Bank for $68 million during the bust in 2008, WCI had already sunk $200 million worth of infrastructure into the project. Kitson and Evergreen acquired the property for $31 million in early 2011 and recently celebrated the grand opening of the community.
Already, Talis Park notched 17 lot sales in the opening week, Kitson says. One customer paid $1.5 million for a lot on which he plans to build a 24,000-square-foot home. Homes at Talis Park will cost from $700,000 to more than $1 million, and Kitson says the 550-lot community could sell out within five years, and maybe faster.
“The homebuyers generally pay cash,” says Kitson, noting that many of the Talis Park buyers are acquiring a second home. “They feel more confident. The stock market has absolutely helped.”
In Pinellas County, Kitson is finishing the Bay Pines development he acquired in 2010 for $7.7 million, a former mobile-home park near Madeira Beach. He has since sold off the 60-acre tract to residential builders and is developing a retail center. “We're basically done with that project,” Kitson says. “It's gone extremely well.”
Backed by Evergreen, Kitson controls 1.5 million square feet of commercial retail centers around the state. Until recently, Kitson has acquired existing retail centers.
But prices for shopping centers have risen to the point that Kitson says he plans to develop rather than acquire them. “This is a shift in our strategy,” he says.
While Kitson is confident in the economic recovery, he remains cautious about its pace. “I don't think this is a boom or anything like that,” he says. “We've got to be thoughtful.”
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