This past week the tradition continued. On Tuesday the owners of the closed and ever-contentious Colony Beach & Tennis Resort heard two competing redevelopment plans.
Both Colony proposals offer to rebuild the 17.2-acre site and either buy out the existing owners or offer time at a redeveloped resort.
But there the similarities end, and the details as to how much money is offered, the desired size and scope of the resort, as well as the level of detail offered underscored the vast differences between the plans put forth by developers Chuck Whittal and Manfred Welfonder.
‘We can close in 10 days’
Whittal, who is President of Orlando-based Unicorp, presented first at the Unit Owner’s Annual Meeting. He opened by reminding the owners that his company owns 2.3 acres of The Colony, — assets he bought from Randy Langley and David Siegal of Colony Lender.
Whittal added that his owned property constitutes the prime beachfront at The Colony as well as the tennis courts and other amenities. Then Whittal used a map overlay to show how he arrived at a valuation of the property which forms the basis of his cash offer.
In short, Whittal’s offer is to pay owners $126,000 per unit for an outright sale and he says Unicorp can close in 10 days. Unicorp will pay an additional $200,000 premium for waterfront units and those owners would receive $326,000 per unit. These prices are based on a vote of The Colony owners who would have to terminate the existing condominium in order to sell.
Pragmatically, it takes a vote of 80% of the owners to terminate the condominium and the collective association that binds the property together. That vote is necessary for any redevelopment or transfer of ownership or change in control.
Whittal said he first took steps to redevelop The Colony several years ago after a conversation with Sarasota Attorney Morgan Bentley at a golf tournament they were watching. Bentley told Whittal that the key to developing the resort was one of two ways. Either form an alliance or relationship with Andy Adams, who then and now controls the largest share of units — more than 70 —, or, work with Colony Lender, which had bought the collateral on a loan that includes the 2.3 acres and the recreational amenities.
Whittal said he got nowhere speaking with Adams and subsequently worked out a purchase agreement for Colony Lender’s assets.
“I am pointing this out because it is a reason to have a unified solution,” Whittal said.
Whittal said that his sole goal is to redevelop the property and not to sell his assets. He has hired Ernest and Young to assess the viability of the site and has zeroed in on Rosewood, Four Seasons and St. Regis as named hotel flags.
“We would not do a four-star, but a five-star brand,” Whittal has maintained.
Next at the meeting, Whittal spoke of how he arrived at the valuation of the property. He says he values the waterfront acreage of the property at about $6.5 million per acre; the frontage on Gulf of Mexico Drive at $800,000 per acre, and the property in between in the middle of the resort at $1.3 million per acre.
Whittall’s overall proposal encompasses 360 units, of which one-half would be condominium and one-half hotel units. The amenities, including a spa and lagoon style pool and restaurants, would be shared. He said the property would be elevated up to 40 feet in the rear of the site and would have descending levels to maintain the waterfront views.
Whittal also said he is trying to forge a relationship offer with neighboring Tencon Condominiums to incorporate their tennis courts into the project and allow Tencon owners full access and use of the resort amenities.
$30 million in 10 days…
Whittal summed up his proposal in saying it amounts to a bulk sale for $30 million and he can close in 10 days.
Another option, said Whittal, is if owners are not interested in selling he would discount the $30 million sale price by $126,000 and each unit owner would receive a 30-day vacation slot, which they would own. In short, it would be a 30-day fractional.
“The bottom line is you can buy into the project, or take the cash and go on your way,” said Whittal.
Whittal said it would take four years to take the project through permitting with the town and develop the site.
For this proposal to work out, Whittal told Longboat Key News, the Association of Unit Owners has to have Andy Adams on board. He added that he is going to speak with Adams next week and he hopes the negotiations do not end in a stalemate. If that were to occur, Whittal said eventually the court could be petitioned to appoint a receiver and the property could go to auction for bid.
As for ongoing litigation, Whittal said he doesn’t see anything that could diminish Unicorp’s ownership position, but if Judge May rules that Unicorp owns the recreation lease, it would create a liability for the owners.
Manfred’s plan Manfred Welfonder was introduced at the meeting by Colony Board President Jay Yablon.
Yablon joked, “One thing that distinguishes Manfred, is he is the only individual who has never been involved in one of our lawsuits.”
Welfonder said that he has partnered with Naples-based Lutgert Companies and seeks to redevelop The Colony by 2018.
Welfonder said that he had played tennis at The Colony for more than a decade and has spoken with owners and believes the owners and the town both want a redeveloped Colony with a “Village-type character, with open space, walking space and green space.”
He said that his team is financially prepared to buy any assets at The Colony that are available including Unicorp’s and Andy Adams’ units.
As for his offer to the unit owners, Welfonder had three options. For owners who wish to participate in the redevelopment of what he calls a four or five-star hotel, they can buy a single hotel unit at a discounted price below market value. He said all units can be used for up to 30 consecutive days and such an owner can put the unit into the hotel’s rental program. This program would be similar to what many owners were used to in that they owned their unit and could enjoy it for 30 days and a management company would rent it out for the rest of the year.
The second option is to convert the current ownership deed into a co-ownership deed. In essence, an owner would receive a deed to a fully-furnished suite that could be used 30 days a year, but the ownership would be shared with other owners.
The third option is as Welfonder said, “We buy the unit at the price satisfying to the owner as well as us.”
Other details Welfonder spoke of is that they have selected three hotel companies they have been working with to arrive at room configurations as well as projected room rates. He said these companies give design standards and amenities that must be built and delivered.
As for remaining a tennis-type resort, Welfonder said, “I am holding discussions with well-known tennis related persons and you will like it as an owner.” He added that his project conforms with the town’s zoning requirements and he has sent the proposal to neighbors north and south of The Colony.
The audience had several questions for Manfred and sought firm financial details.
“How much more are you paying us for our units than the former presenter?” asked one audience member.
“I am not familiar with the former presenter,” answered Welfonder.
The audience member continued, “Then how much are you paying us per unit?”
“We will sit with each and every owner and discuss a fair and reasonable price,” said Welfonder.
“You do not have a ballpark price?” asked the audience member.
“We have,” Welfonder said.
“What is it?” persisted the audience member.
“We do not want to discuss because there are two open line items, Colony Lender and Andy Adams,” said Welfonder.
The audience member was not assuaged, “It’s a nice presentation, but the most important thing is missing, and that is: How much?”
Another audience member said that the Association has been down the road before with significant developers who did not have any agreement in place to buy the “open line items.”
Welfonder replied that his team’s budget to develop the site and pay Adams and Colony Lender is about $200 million. He also said that Unicorp’s proposal requires a public referendum, whereas his does not. Welfonder said he would need a four to six month exclusive agreement while he negotiates with Adams and Colony Lender.
He added that he urges unit owners to join his project and that it would be better for them not to sell. “It does not make sense to sell. Your current fair market value is $50,000,” said Welfonder.
An audience member was upset with that valuation, “Your number is wrong to begin with. I would think your number should be $150,000.”
Welfonder continued, “Then why did 70 owners sell for $50,000 and less? Seventy owners cannot be stupid.”
The audience member then said, “It is really upsetting me that people have in mind that my place is worth $50,000. I’ll burn my place before selling it for $50,000.”
Shortly after this back and forth the presentations were over and it will be up to the unit owners and the Board to decide which direction it wishes to go or whether to hold a poll or vote of members to determine the desired direction.