Neither Florida’s Weather nor Bobby Ginn’s Future Can be Predicted Accurately

Like the eye of a hurricane, this weekend’s Hammock Beach Member/Guest Golf Tournament showed little sign of the surrounding turbulence in the GINNdom.

Palm Coast, Florida – October 5, 2008 – There are storm clouds in Bobby Ginn’s real estate GINNdom. A $675 million credit facility with Credit Suisse is in default. A September 29th report issued by Standard & Poor’s Ratings Services noted it had withdrawn its recovery rating on the debt owed by two Ginn entities; Ginn-LA Borrower LLC and Ginn-LA Conduit Lender Inc. The reason cited by S&P was the company’s Chapter 11 Bankruptcy filing. I asked a Ginn Company spokesperson to comment on the S&P report. His response, "Toby, this is not accurate. No such filing has happened."
The Credit Suisse credit facility was backed by specific assets in four of Ginn’s developments. It does not affect any other Ginn properties. The pledged assets include selected Ginn-owned properties in:
  • Ginn sur Mer – The Bahamas
  • Tesoro – Port St. Lucie, FL
  • Quail West – Naples, FL
  • Laurelmor – Boone, NC
Rumors abound, ranging from reports that Credit Suisse has already taken possession of some of the properties, to closed sales offices, to significant staff reductions. The list is too long to include here. Clearly, several property owners in many of Ginn’s communities are in trouble financially. The high number of foreclosures, delinquent property taxes, non-payment of club dues and association fees in Bella Collina, Tesoro, Conservatory, Yacht Harbor Village, and even Reunion are not rumors. They are troubling facts.
To add momentum to the swirling stories, Alico, a Florida land management company issued a press release September 30th announcing it had granted Ginn-LA Naples, Ltd. LLLP and West FM Crockett,, LLC (Purchasers) an extension until October 3, 2008 to pay the amounts due on three real estate contracts.
The contracts were originally entered into in July 2005 and December 2006 and related to the sale of approximately 5,590 acres in Lee County, Florida for a total purchase price of $138.4 million. According to the terms of the contracts, The "Purchasers" were scheduled to make a mortgage principal payment of $4.0 million, an option extension payment of $3.6 million and an interest payment of $1.2 million on September 29, 2008. The contracts were already restructured once in October 2007 as reported by GoToby at that time. Alico Restructures Land Sale Agreements
Meanwhile, a major member/guest golf tournament went off at Hammock Beach this weekend without a hitch. As a guest, I experienced two world class golf courses in fine condition. (The Conservatory Course will host a PGA Fall Tour event later this month.) I did not notice a lack of staffing. The facilities were well maintained. The Hammock Beach Resort is impressive. Playing the Ocean Course, I noticed several luxury homes under construction, a good sign. The golf and hospitality staffs were very professional. The only hint that some cost minding was going on was the absence of the advertised "live entertainment" at the awards banquet.
The Ginn members included those who owned property in the Conservatory, Hammock Beach, Ocean Hammock, or Tidelands. I spoke with many who read GoToby regularly and are aware of Bobby’s problems. There were discussions about Credit Suisse, pending lawsuits, etc. Most owners are in a cautious wait and see mode, not panicked. They thoroughly enjoy the Ginn membership experience and think that somehow, Bobby and Hammock Beach will survive. Notably absent, for obvious reasons, were the property owners now in financial straits.
In 1989, I experienced Hurricane Hugo in Charleston, SC. The eye of the storm passed over our house. In the center of a category 4 hurricane, it was eerily still. I could see stars in the sky. There was extensive damage, more than any previous US landed hurricane at the time. Some of the damage could not be repaired. Some people lost everything. But Charleston did rebound. It was, and is again, a thriving tourism driven city.
Is the GINNdom being hit by the equivalent of a category 4 hurricane or will it be shown to be merely a tropical storm. I think it’s probably somewhere in between. It is too early to assess the damage. It will not be superficial. Individuals are going through bankruptcy brought on by the decline in value of their Ginn investments. More will follow. Employees are being terminated, careers interrupted. More will follow.
Facts and rumors should sort themselves out over the next few weeks. It is hard for me to conceive an overall Ginn Chapter 11 filing. Too many of his properties (including those in the Palm Coast area) have essentially no debt. His developments are financed primarily by his financial partner, Lubert-Adler, rather than the use of leveraged debt. Bobby is real estate rich and cash poor. He may be forced to turn over some of his properties to Credit Suisse. He may find it necessary to sell off others to raise cash. But he will be most protective of his core resorts; Hammock Beach (including the Conservatory and Yacht Harbor Village) and Reunion.
And that’s the weather. Stay tuned for the news.
3 replies
  1. Jim
    Jim says:

    Ginn Problems

    We are in the early fazes of a financial crisis. Mr. Ginn is stuck squarly in the middle of the crisis which has spilled into the residential and commercial real estate segments of our society. Hey, Bobby was just doing his thing, making money, providing properties, assets and dreams for all of us here in America who have to have it all. A nice home in Atlanta, Orlando, Dallas, Boston or Little Rock was not enough. All of us baby boomers coming of age had to have something more. We are American…why can’t we have more than we need? Why can’t we have a second home? Or, why can’t we have a first home that is more than we could have afforded? Hey..It’s American! We are entitled to more right? We are the beacon of hope for all the world, right? We are the center of the universe, right?
    Hey guys and gals, guess what… That is all in the past. We are now looking over our shoulder at China, India, Japan and CHINA… They are coming for us. They have the most productive society on the planet right now. They are requiring more of the natural resources of the planet right now as they grow and mature into a real world power. America is on the verge of our last days as the only true super power. We drive gas hogs that require our dependence on people who do not like us, we seek more material items to insure our position in our society, we buy more than we need of almost everything and waste it.
    Hey, everybody in the USA does not do this, but enough of us do to feed the greed of individuals who have the cash to buy and build and sell to us the "stuff" that we all think we need to be better people. Bobby is just one of those people. We helped to create him by our more more more mindless attitude. So we can play, eat, sleep and golf and swim in Florida. Hey, I can already do that where I live now. Why do I have to do it in Florida as well? Because I can…. Ginn feeds on the people who are the same as me. All because we can.
    So….don’t jump on Bobby because he has provided an option for the greed of individuals who want more but really don’t need it.
    I personally am sorry that there is a problem with his company as the problems are created by the worldly needs of individuals like myself rather than any wrong doing of the Ginndom. Hell, they are just trying to provide what we think we need. The people who really get hurt are those who depend on the blindness of America for jobs; waitresses, caddies, bartenders, hospitability workers, maids, janitors, landscapers…..middle American.
    Bobby Ginn’s future is a reflection of America’s future. Go to any major town, city, metropolis and you will find him there in another name. All of them are trying to give us what we think we need, more materialism.
    Ginn is just the perceived problem for Palm Coast when the real problem is the symbiotic relationship that you folks there have gotten used too. Now that he is suffering, you also suffer because you have depended on him and probably coveted what he has had in the past. PC…it is not Ginn’s fault. PC is a microcosm of what is wrong with American today. Capitalism feeding on greed depends on the lemmings to do the work so the company can make the cash. When the company can’t make the cash, the lemmings rebel because they can’t make money.
    Ravings of a madman for sure, but I see the light at the end of the tunnel coming quickly and guess what is the train.

  2. PK
    PK says:

    Jim, amazing insight

    I found your rant to be littered with truth, albeit from a grim perspective. We have all laid witness to historic recless availablity of credit. This coupled with our insatiable appetite for stuff created the perfect storm for Ginn’s success. I enjoyed it for a while and then took a big bite of humble pie, no mas por favor.

    Ginn sold the dream of second, vacation, home ownership. The dream was sold so well that people believed it to be the wave of the our future, and why not, they all showed up in real nice cars and big fancy watches to "invest" in real estate so they could… buy more stuff. Our country has seen a dramatic decrease in wealth in a mere heartbeat. It won’t ease soon either. We’ll go from buying second homes to adding second families to our home if we are not careful.

    Believe it or not, Hammock Beach and the Palm Coast holdings are best suited for the next 10 years out of all the Ginn properties because they are more apt for the retrinng baby boomer crowd who are about to get laid off from corporate America. Ex-Middle Management will love HB and all it has to offer, they just won’t be able to afford those ’05 prices. Either bail now or sit tight for a while.

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