The Lubert-Adler Connection – Where does Bobby Ginn’s Development Money Come from?
Why the Ginn Company seems to be so resilient in the depressed real estate market.
April 3, 2008 – Palm Coast, Florida – I just finished covering the Ginn Championship at Hammock Beach. The tournament is part of the PGA Champions Tour. This was the second year Bobby Ginn’s Ocean Course at Hammock Beach hosted the event. As a response to the downturn in the real estate market, Ginn made some changes from last year. The blimp was gone. It’s now owned by Direct TV. The number of volunteers was down a little; as was the compensation package they were given. The Saturday night Smokey Robinson concert was limited to Ginn Club members only.
But the tournament did not suffer a bit. By all accounts, it was even better than the inaugural tournament last year. The pros were consistent in their praise for both the venue and the atmosphere surrounding the event. And the Ginn Company reportedly sold 4 of the Hammock Beach Tower condominiums for prices between $1.4 and $1.6 million each and has contracts "working" on two more.
There are signs locally that Ginn is cutting back in response to the present real estate slump. The lobby, restaurant, and ships store of the Admiral’s Cove condominium at Yacht Harbor Village in Palm Coast remain unfinished. The Gardens at Hammock Beach along John Anderson and the Intracoastal Waterway shows little signs of construction activity. And there have been staff reductions. But amid persistent rumors of Bobby Ginn’s financial demise, the company keeps plugging along.
I recently uncovered some information regarding the relationship between Ginn’s Company and the Lubert-Adler Fund, his long time funding source. The relationship extends beyond that of lender and borrower. An undated document attributed to Lubert-Adler, reports that they own 50% of The Ginn Company and 80% of each project. It also states that the Ginn Company is the only residential asset in the fund and is the largest component and best performing asset in the fund over the past 10 years.
Institutions reported to be investors in the fund include:
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Wells Fargo
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Kodak retirement plan
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Duke University
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Harvard University
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Princeton University
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Pennsylvania State Teachers fund
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Ohio Police and Fire
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City of Philadelphia
Since it was founded in 1997 by Dean Adler, Lubert-Adler has invested in over $15 billion in real estate assets, according to its website. The website lists several of Ginn’s properties in their portfolio but there is no mention of Ginn’s biggest project, Ginn Sur Mer on Grand Bahama Island in the Bahamas. Another project, The Gardens at Hammock Beach, was once funded by Credit Suisse. When they pulled their backing last year, Lubert-Adler stepped in to fill the void. Both Ginn and Lubert-Adler are private companies, making it difficult to get detailed and complete information, but the ties between the two are obviously strong and deep (as deep as Lubert-Adler’s pockets). They can take the "long view" because they don’t have to report to stockholders and financial analysts every three months as do WCI Communities and Centex, two large developers also active in Palm Coast.
exceptional article
Toby, you missed your calling! You qualify for super financial super sleuth of the year. Very interesting article. Wil
Ginn
Does anyone know the latest on his troubles with his bank loan? What will be the likely outcome at Tesoro?
will Tesoro remain first class
I am an owner in Tesoro and club member. Ginn has done all it promised and more. It is a very very fine country club community. I am disappointed in sales but really cannot blame the developer. The economy is really the problem. If Credit Suisse took over Tesoro, would that include the golf courses, clubhouse, operations and sales?
Also, I have two lots in Laurelmor and wanted to build a home there for my family. I cannot find out much about what is happening there. An awful lot of money has been put into it. Does anyone know.
Reply to Mike
Mike,
The $675 million credit facility with Crdit Suisse is in default. The 30-day forbearance agreement has expired. But as of 8/14/08, Ginn-LA are still talking with Credit Suisse. Tesoro is one of the four properties affected. If the credit facility cannot be restructured, it would be likely that Credit Suisse would take over Ginn owned property there.