The purchaser is an entity formed by the current golf course operator. The sale assures continuity of the golf operation making the surrounding residential development more attractive for development.
PALM COAST, FL – September 30, 2015 – Another of Flagler County’s golf courses is on more solid ground as Capstone Golf, the long-time operator of the Grand Reserve Gold Course, has purchased the course from the debtor in possession, CRM Florida Properties LLC. The purchase price was $1,300,000. The transaction closed on September 4th and was recorded September 10th.
Grand Reserve is one of four public play courses in the Palm Coast area. The others are Cypress and Pine Lakes, both privately owned, and Palm Harbor, owned by the City of Palm Coast and operated by Kemper Sports.
The Grand Reserve is a master planned residential community and golf course on Rt 1 north of Bunnell. It fell on hard times when the housing bubble burst. The public play golf course has remained in business since opening in 2008, but only six homes were built. SunTrust foreclosed on the development and took possession in September 2011. The bank also was assigned the rights and obligations of the Developer/Declarant.
There was once a homeowners association, responsible for administering the community’s Covenants, Conditions and Restrictions (CCRs). It’s now defunct. Violations of the CCRs (trailers, equipment and extra cars parked on adjacent vacant lots of a few houses) were clearly visible on a drive through the community in April, but the remaining homes were neatly kept and well maintained.
The community obtained bond financing for construction by forming Deer Run Community Development District. A CDD is much like a municipal government, but without police powers. Grand Haven and Hammock Dunes also have CDDs. CDDs are responsible for maintenance of common areas and to pay its debt obligations. CDDs get revenue by assessing property owners within the district. The CDD finance bonds were separate from the mortgage the developer was granted by Suntrust.
In addition to letting the owners association wither, the lender also did not make its obligatory payments to the CDD, causing the CDD bonds to go into default. The CDD sought to foreclose on the bank. The CDD bondholders also sued.
As a result of a Settlement Agreement, a Memorandum of which was filed February 13, 2014, the bondholders gained title to the residential component of the community. A SunTrust entity retained the golf course. Past due CDD accounts payable were brought current. For the first time in three years, qualifying homes are receiving irrigation water and common area maintenance resumed. Grand Reserve starting to look good again.
The bondholders don't plan to hold onto the residential property. They retained Tampa-based Lerner Real Estate Advisors to evaluate Grand Reserve with the goal of mapping out a disposition strategy. Since the new owner of the golf course plans to continue golf operations, the residential component will be more desirable to residential developers. GoToby has heard that there are at least two national firms taking a close look at the property.
Platted lots at Grand Reserve total 157. There are several hundred acres of un-platted land that is part of the Deer Run CDD. That property is likely to be developed sooner rather than later, in order to facilitate the cash flow that will be required to pay down the CDD bonds. Since the CDD bonds are linked to both the platted and un-platted portions of the project, it is likely that the property will be purchased by one developer rather than be subdivided.
The development is in the City of Bunnell. Access to both Route 1 and SR 100 are a plus, as is the golf course. I expect future residential development within the project will be in the same price range as homes in Hidden Lakes.