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Bobby Ginn Conference Call with Hammock Beach Club Members

Much maligned for the lack of communication to property owners, Bobby Ginn hosts a members only conference call.

By Toby Tobin
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Palm Coast, Florida – July 30, 2008 – Amid a two-front war battling credit issues and lawsuits, Bobby Ginn, chairman and CEO of Ginn Clubs and Resorts, went on a member relations offensive when he hosted a Wednesday conference call with members of his Palm Coast, Florida Hammock Beach Club. The call, lasting nearly two hours, was intended to provide a status report on the company and to answer members' questions. If graded by the participating members, the call was successful. Ginn plans to repeat this process in each of his communities and resorts.
 
After introductory remarks, Bobby took questions from about a dozen members. Bobby acknowledged his recent lack of communication with property owners and club members. Things were just happening too fast, he said. Bobby's focus was less on the company than on the Hammock Beach Club. Hammock Beach represented a unique opportunity for a large family resort on the east coast combining a private club with a hospitality operation. The strategy, as in other Ginn projects, was to sell lots first, using the proceeds to develop the property, thus reducing the amount of leverage required. His is a phased development model, undertaking each phase only when the success of previous phases supports it.
 
florida palm coast real estate former ginn blimpBobby stressed that, as a company, they assemble large tracts of land, envision a trophy property on that land, obtain necessary permits, develop the property, then operate the finished project. This can take as many as ten to twenty years. Real estate cycles are bound to interfere with plans. Present delays and lessened property values are the result of the current downturn, which Bobby says is perhaps the worst he's ever seen. Ginn takes a long view, beyond individual cycles; saying that holding highly amenitized trophy properties always rewards you.
 
He also discussed the company's financial difficulties. Each Ginn property is separately financed to protect each community from a failure in any other.  Hammock Beach and other Palm Coast area properties owned by Ginn are not affected by the recently publicized failure to make principal and interest payments on two Credit Suisse debts. "We are holding our own," he said when referring to Hammock Beach. Buyers walked away from about 70 of the million dollars plus Ocean Tower condos. The company had counted on that revenue so they are adjusting the business model. Twenty-five of the first and second floor units were recently sold at half price.
 
Another problem is that some members, particularly in The Conservatory, are not paying their dues. The introduction of the One Club, where membership in Ginn communities becomes reciprocal giving members a much broader range of resort opportunities, is aimed at increasing membership participation and adding value to existing and future memberships. "Don't react hastily to the market," he urged. He believes that they have the plan to climb out of this in about 18 months.
 
Member concerns were concentrated on a few issues; lack of communications, frustration with Ginn's sales staff's efforts to sell resale properties, and concern about maintaining the exclusive nature of the Hammock Beach lifestyle.
 
One member told of listing one of his properties with the Ginn sales staff. Once the listing agreement was signed, he heard nothing about potential buyer activity from the salesperson. In fact, he was not even contacted when the listing expired. The fact that the member repeated this same process two more times, apparently expecting a different result, speaks volumes about the Ginn mystique, the property owner, or both.
 
One caller pointed out the conflict of interest between the sale of developer owned property and member resale property. Ginn acknowledged the conflict but rebutted that the launch of a new phase would tend to raise the value of existing property.
 
Other callers suggested that Ginn leave resale activity to outside real estate companies. "Get out of the way to allow other companies to come in," said one. Ginn agreed that many of his development properties were sold with the help of outside brokers, but he disparaged them with regards to the resale market. He suggested that outside brokers "generally come in to sell against us," telling their clients that Ginn prices, club dues, and association fees were too high. They would then show a "Centex lot that was the same size." He also commented that selling his types of properties was a different kind of selling. He said that "general real estate brokers do not have those clients. They're not walking around in a Century 21 or a Remax for the most part."
 
Ginn also explained that he had joined MLS (multiple listing service) by forming Ginn MLS to allow him to expose Ginn resale listings to outside brokers. A check of the local MLS records shows that Ginn MLS is in fact a member, but with only a broker name attached to the membership. No sales staff is listed, something more typical of a member desiring only access to MLS data. 6,150 properties of various types are currently listed with the Flagler Association of Realtors MLS. None are listed by Ginn, making his remarks appear disingenuous.
 
From the members' viewpoint, Ginn Hospitality drew good marks. They were pleased with the rental program as well as the food and beverage operation. The condition of the Ocean Course, however, drew complaints. Bobby admitted the sorry conditions, saying that the course was not constructed according to the plans. While quick fixes would help some, the final solution would require closing the course for months. Ginn plans to do this in conjunction with an overhaul of the clubhouse, but not this year.
 
Members expressed concern that the strategy of reducing prices on remaining developer inventory reduced the value of their property. They also were strongly against the concept of a recallable membership being considered by Ginn. They felt that outside members would diminish the exclusive nature of their current lifestyle. In fact, recallable memberships are common in most clubs. They supplement club revenue (while the project is being built out) until the desired membership level of property owners is reached. Bobby agreed only to work out a compromise with members, implying that some form of recallable membership was definitely in the cards.
 
Interestingly, nobody complained about the presence of members from Centex's Tidelands Condominiums. Centex had acquired several Ginn memberships as part of the sale of the Ocean Course to Ginn. These were used as incentives to sell Centex's remaining Palm Coast condominiums.
 
The conspicuous absence of any member questions regarding current lawsuits, whether by accident or design, was surprising. One property owner, however, dispelled the Ginn assertion that they did not try to sell to speculators or investors; that their goal was to sell to people who will build. This caller said he made it clear to the Ginn salesperson that he had no intention to build. He said the Ginn sales team pitched it as speculative.
 
Another property owner asked Ginn to disclose the number of Conservatory lots in foreclosure and the number of those delinquent on association dues. Bobby, politician like, managed to answer a different question than the one asked, thus avoiding the original question. Public records show that 13 Conservatory lots have been taken back by lenders through foreclosure. Two have since sold, one for $85,000, the other for $92,500. An action to foreclose has been brought against an additional 60 lots. All foreclosure filings do not end up with the lender taking possession. Some owners are able refinance or renegotiate the terms of their loan.
 
If Bobby Ginn wants the support of his property owners and members as he works his way through troubled times, he is going to have to do a better job of communicating honestly with them. Yesterday's conference call was a good start.
reader comments
Bye michael
Posted by jim B
Aug 07, 2008, 6:23 am
To Michael, glad your gone one less snob to deal with
Another view on Tidelands
Posted by D
Aug 03, 2008, 11:08 am
I can appreciate existing members having a problem w those Tidelands owners that received free dues etc..
But keep this in mind. The Hammock Beach Club received ~ $10K/yr on dues for each of these members plus what they spend at the club. I am one of the Tidelands folks and it looks like I will spend ~$10K this year on F&B etc. So The Hammock Beach Club and its members is realizing in just this one case $20K in revenue /yr that it otherwise never would have seen. Multiply this many times for the entire group.
D
Weather the storm....
Posted by Leo Harris
Aug 02, 2008, 9:48 pm
Its all a gambling game. Everyone was riding high a few years ago and now everyone is sour grapes. In my opinion, Ginn has done the right thing all along EXCEPT for slashing his prices in half, which hurt many owners including myself. But heck, if I had that inventory, I would do it too.

The real villain here is Centex who DUMPED all its holdings, gave away all those memberships for free and devalued all resale hopes for investors in Ocean Hammock and HB.

Part of the real estate investment world I guess.....either dump it or wait it out.
Get Real Rich
Posted by Michael
Aug 01, 2008, 9:05 am
Centex offerd free golf memberships and free dues for 2 years on some of the Tideland condo's. I was an owner of one of the Villas at Hammock Beach and when sitting at the pool I met a fellow from Tidelands who told me he had no idea how he was going to afford it all once he had to start paying for it. I have since sold my villa and will be joining a country club where people are not leaching off the dues of others.
Conference
Posted by Rich
Jul 31, 2008, 10:09 pm
Toby
Not sure why you seem surprised that know one mention Tidelands . The people paid in full for there membership, and Centex owned the Ocean Golf Course which means that if anything they were lucky that Centex sold the Golf Course to Ginn . Now that there is reciprocal's with all the property's what is the difference.

Rich
Ginn Conference Call
Posted by Lulu
Jul 31, 2008, 9:32 pm
Well, at least BG DID finally communicate with Cobblestone Park owners yesterday.
I have never heard a con-artist speak, but I had the opportunity and was in awe of how spin is spoken. He made it all sound so simple and I perceived his discussion re Credit Suisse as no biggie.
I took his words as just grains of salt, nothing more. If CP has no debt, how can it not be inflicted with the woes of Laurelmor, Quail West, Sur Mer, etc? No money is NO money.
At least, construction is scheduled to begin AGAIN on the new clubhouse with expectations of 12 months for completion. I am not holding my breath on anything in CP, but hope that the development will flourish one way or another. We have no way to go, but up.
Question for Toby
Posted by Timmy Mayflower
Jul 31, 2008, 5:44 pm
Toby;

good article.

did anyone ask bobby what were the renogiated plans for the $700 plus million dollar payment missed? or what where the plans for the next payment?

George: its really not the developers fault when this market happens the way it does, the value has dropped in real estate from here to southern california....and all developers are trying to find new ways to raise cash!!

You really have to consider that as the main reason why even geniuses like bobby cant talk themselves out of this!!!

thanks
Timmy

p.s. resellers are vultures and dress up unrealistic price values just as well...enough said!!
tell them to get real jobs!!
Hot air Balloon
Posted by George
Jul 31, 2008, 3:14 pm
Now we know how he filled the balloon!
AGREE
Posted by k
Jul 31, 2008, 2:39 pm
It would be wise of Ginn to let go of the resale inventory and have professionals who know the resale business do what they do best. There is not a law anywhere that states Ginn Real Estate has to sell resales in his communities. Get educated!
Wait 18 Months????
Posted by George
Jul 31, 2008, 2:38 pm
Bobby sounds like he is in a heep of trouble and so are the owners of his developement properties. The many corporate CEO's that have had the same line as Bobby have been fired and or indicted for fraud. Sounds like the MAD Money Cramers hall of shame has a place for one more. The statement that things are moving to fast indicates that a lose of control has happened. The balls he is juggling are starting to all come down at once. The 60 Conservatory lots that have leans against them due to unpaid fees or loans proves the point that the sky indeed is falling. Again as I said before: cut your losses and get out while you can, as they will continue to drop in value, as the deck of cards that Ginn built falls to the ground.

 
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Don "Toby" Tobin is a licensed real estate professional affiliated with Grand Living Realty. Toby is a member of the Flagler County Association of Realtors®, the Florida Association of Realtors, Enterprise Flagler, Flagler Home Builders Association, and the National Association of Realtors.

GoToby.com proivdes real estate news, commentary, and analysis for Palm Coast and Flagler Country Florida, as well as Realtor® referrals and consultation to buyers, sellers, and developers.