Two Hours with Florida Real Estate Developer, Bobby Ginn – His Side of the Story
My recent article about the GINNdom attracted a lot of traffic to GoToby.com. It also got me a meeting with Bobby Ginn.
Palm Coast, FL – June 18, 2008 – Shortly after posting my recent article, A horse, a horse, my GINNdom for a horse, I was contacted by Ryan Julison, Ginn’s Senior V.P. of Corporate Communications. He commented positively on the depth and breadth of my sources. We also discussed the differences between fact and rumor. He did not refute any points made in the article, but emphasized that his company wanted to be sure accuracy prevailed. Hence, he offered to make himself available to me in the future to validate any information. He also offered to set up a meeting with Bobby Ginn.
So Monday, I entered Bobby’s GINNdom. This was our first meeting. Before moving to Palm Coast in 2000, I spent 15 years living in Charleston and doing business in the Carolinas and southern Virginia, so I’m not unfamiliar with the potency and calming effect of southern charm and hospitality. True to his reputation, Bobby Ginn is the consummate schmoozer. My schmooze alarm went off two hours later.
We covered many subjects, but underlying most were the major issues facing Bobby today; pending lawsuits, lack of sales, and the number of distressed properties in many of his developments. Leading off, Bobby made a strong point; that the industry has developers and it has (resort and amenities) operators. He says that he is both, but he’s an operator first and a developer second, that he does not just build, and then move on.
When questioned about the incomplete projects such as the unfinished lobby, ships store and restaurant in Palm Coast’s Yacht Harbor Village, and Bella Collina’s non-existent sports center near Orlando, he replied that these items were planned and they are still planned. All the utilities are in place for the sports center. But amenity timing is dependent on people building houses, moving in, and joining the club. It takes money to build, staff, and operate them. With membership unfilled, dues would need to be increased to cover the added costs. This, says Bobby, would be both a bad business decision for him and unfair to the present members. "Time the amenities with the membership. That’s my job. My job is to operate. I’m hired to provide lifestyle and to keep costs down."
Bobby says that he specializes in what he calls trophy properties. "You can’t go wrong with trophy properties. They will always have value in the long run," Bobby says. He emphasized two points. First, long term demographics; the baby boomer generation has a large segment of wealthy future retirees who will be looking for luxury lifestyles for the next 15 – 20 years. Second, his trophy properties will be well positioned geographically with rich amenities to attract these clients. For example, a member of Chicago’s Wrigley family recently closed on a $3,000,000 lot in Palm Coast’s Hammock Beach.
His discussion turned to those who bought Ginn properties but are now unable to afford them. Trophy properties are expensive, he says. If you can’t afford them and don’t have the resources to make it through the bottom of a real estate cycle, you shouldn’t have bought them.
Although most Ginn property owners turned out to be investors, hoping to flip their properties, Bobby says that he was not trying to attract investors. "We didn’t build for people to come in and speculate." He pointed to the requirement that owners had to agree to build within a specified time to emphasize his point. "You got to build a house." But on the subject of the pending Michigan law suit, he argued that many of those named in the suit had made money with him on previous projects. (That makes them sound a lot like investors to me.)
Bobby claims that his company followed all required disclosure requirements. "Nothing was concealed." He understood that some buyers may have gotten caught up in the moment with the exploding real estate market and the concept of ever-rising prices. "They bought something they couldn’t afford." He then added, "If someone relies on what a salesman says without checking it out, he’s an idiot." He doesn’t understand why a property owner would bash Ginn’s developments. "Bashing only destroys their property’s value."
Ginn acknowledged that slow sales, unfilled memberships and delinquent membership dues are hurting cash flow. Yesterday’s announcement of price reductions on some Ocean Towers condominiums at Hammock Beach is a clear indication of the need to respond. Bobby also discussed plans for club membership designed to enhance the membership experience and contribute to cash flow:
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Reciprocity – Ginn Club members will be able to enjoy reciprocal privileges at other Ginn clubs and resorts.
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Callable memberships – Ginn is considering issuing callable memberships to non-Ginn property owners. Callable memberships would enjoy all the privileges of other members but their membership can be recalled in the future. Callable memberships would not be allowed beyond the target membership level. Hammock Beach Club membership is currently at about 50%.
When the subject of pending lawsuits came up I told Bobby that, among other items, I had seen what I would characterize as bogus appraisals for lots in Bella Collina, apparently doctored to support mortgage applications for quickly appreciating lots. In one case, an interior lot was the subject property. It was compared, without adjustments, to other lots with either golf course or lake frontage. The size of the subject lot was also inflated. Bobby replied that it was the bank’s, not his, responsibility to oversee appraisers.
Bobby Ginn clearly faces many challenges. With several of his developments stalled by the real estate slump, disgruntled property owners, cash flow issues, and current and pending lawsuits, he will be busy. He says that real estate development is a long term business. "You have to be able to take the good with the bad and live through hard times."
What about the future? Many Ginn property owners face grim choices; foreclosure, short sale, deed in lieu of foreclosure, or the continued financial drain of carrying a non-performing asset currently worth less than its mortgage. Some will take their medicine quietly. Others will complain mightily in chat rooms or file law suits. Are their claims valid? Time (and the legal system) will provide the answers to that question. Meanwhile a new crop of buyers is waiting in the wings for things to settle down so they can grab a trophy property at a Filene’s Basement price.
Will the GINNdom remain intact through its current malaise? Time (and the legal system) will also answer that question. But clearly, Bobby is not in doubt. He’s pressing forward with two major projects; Ginn Sur Mer in the Bahamas and Battle Mt. in Minturn, Colorado, near Vail.
You can contact Toby at (386) 931-7124 or by clicking Contact Us.
owner/former employee
I appreciate your taking the time to meet with bobby and hear it from the \\\”horses\\\” mouth. I am a reunion property owner and former employee and most of the people making the negative claims and lawsuits have all made money in the past. Now that they are not it is someone elses fault. They called themselves to me many times \\\”professional\\\” investors. Well they as professional investors must understand their own capabilities. Bobby has delivered on his promises it is not his responsibility to make the payments for them.
Ginn Communities
If Ginn didn\\’t sell to Investors, why did he sell multiple lots, in fact as many as 25 lots to one person, did Bobby think that guy was going to build on and live in 6 houses in the same Community, what a crock. He even bought and flipped in his own Communities with his little mate Adler and made $1.3m in one day on 1 lot. I wonder what the Investors in the Lubert Adler Fund would do if they found out one of their Managers of the Hedge Fund was making money on the side at their expense. There was also Ginn Employees that flipped lots the same day for huge profits are they Investors? Did Adler have his hand up Bobby\\’s ass when he was talking because from the rumors Bobby is just a Puppet these days.
His Side of The Story
Well….the spin of BG continues when all the other info says otherwise.
In December, 2007 he stated that numerous \”clubhouses were gutted/rebuilt with the finishing touches being added as we speak\”. Now please, we know that is not true as well as all the other promises he has made to people since 2004 in SC.
Some people just cannot be honest, and here is a guy who must have a PhD in BS.
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25 cents on the dollar
As many banks have done, the property owners of Ginn properties and perhaps Bobby should take what they can get and move on, as the many banks have done with bad mortgages. The values are obviously about 25 cents on the original purchase price dollar. If this does not happen these properties will sit for years, as the real estate recovery in these high priced properties will be not recover soon.