My email inbox gave off the odor of desperation Tuesday. A note from a sales representative for the Reunion Resort near Orlando had fire sale written all over it.
"...prices for the Villas at Reunion Square are being lowered by [about] $300,000 (prices now average $375K) in order to quickly sell the remaining units and move on to developing the rest of Reunion," he wrote. "This will be our last major release at Reunion with a pricing opportunity that compares to ground floor."
The organization that bears the name of its founder, Robert Ginn III,
Ginn has cut some prices by $300,000 at Reunion.
itself may be moving toward ground zero. Ginn Resorts is not lowering prices by 45% at Reunion just because of a bad housing market or to simply "move on" to finish the rest of the development. This smells of cash flow problems. Think of all those folks who paid $675,000 for their villas at Reunion, and now Joe Bagadonuts is going to pay $375K for the same place next door. No developer spits in the eye of previous customers lightly. I've also been told by reliable sources that Ginn salespeople from other projects have been called in to push hard to sell the deeply discounted units quickly.
This all follows a similar fire sale at the firm's big name resort, Hammock Beach in Florida, where ocean condos were reduced from $1.5 million to $750,000. Some years ago, Ginn's Bella Collina community near Orlando sent me a marketing brochure whose front and back covers were made of genuine leather, which I thought a ridiculous affectation. Now, according to a real estate friend who has visited and stayed at all of the Ginn properties, Bella Collina has "big problems...Lake Apopka is alligator infested, has high levels of mercury, fish don't survive in the lake..." "Great accommodations," she said of the condos and homes at the Ginn properties, "but something just didn't feel right."
Owners at Ginn's Cobblestone Park in Columbia, SC, don't have mercury in their lake but neither do they have a clubhouse, whose construction was put
Last week, Ginn missed a payment to Credit Suisse.
on hold after the foundation was poured. Sales have ground almost to a halt at Ginn's Quail West in Naples. Residents of all 11 Ginn communities are nervous about the impact the company's financial problems may have on their own properties. Last week the high-flying Ginn was forced to acknowledge its problems publicly when it missed a payment on both interest and principal to its bankers, Credit Suisse. The firm has also been besieged by lawsuits from residents and investors at some of its properties.
The mainstream media, which is often blamed by real estate professionals for promoting negative news about the housing markets, has given Ginn a pass. Do a search by the terms "Ginn" or "Reunion" at the Orlando
Sentinel's web site, and you won't find any news about the missed payments or lawsuits. But the blogosphere is rife with news updates and complaints about the none-too-shy Mr. Ginn, a walking advertisement for caveat emptor. One attorney representing a group of related investors who purchased 40 Ginn properties, wrote: "There were three families...and they were being foreclosed on all the properties...bought pre-construction and now the loans are past due, lives are ruined, credit is ruined, and yet they still had hope that Ginn would make the deals good until the end...I never met the guy, but they had and [they] could not believe the Ginn operation would allow them to lose everything..."
People did stupid things, for sure, during the housing upsurge. But Ginn's pleas of not guilty (with an explanation) are a little ambiguous. He did
"If someone relies on what a salesman says without checking it out, he's an idiot." - Bobby Ginn
not encourage speculators, Ginn maintains, using as proof his requirement that purchasers build a home within a few years. Yet blogger Don Tobin (
gotoby.com), who was granted an interview with Ginn a few weeks ago, says the developer had previously defended himself in a lawsuit by maintaining he had made money for the plaintiffs, who had invested in Ginn's other properties. As for any hint that company salespeople may have oversold the promise of amenities and future appreciation at Ginn properties, Ginn was unapologetic, to a fault.
"If someone relies on what a salesman says without checking it out," the developer told Mr. Tobin, "he's an idiot." So let's see, if I buy a pair of pants at J.C. Penney and they split apart at the seams, I'm an idiot?
Ginn is no idiot. He has built a large and largely successful company over three decades. But it does seem that some of his recent moves are more advised by ego than business sense. Yet compared with the egocentric but shrewd Donald Trump, no stranger himself to financial problems, Ginn is a mere apprentice who shuffles among ideas like a snail darter. You certainly can't fault him for
Ginn property owners hired planes to fly over NASCAR tracks trailing banners with nasty messages about Ginn.
sponsoring annual golf tournaments at two of his properties in Florida and South Carolina, but buying a NASCAR racing team? That lasted less than two years; he abandoned the team abruptly midway through last year's season and was forced to settle lawsuits with two of his high-profile drivers. Disgruntled Ginn property owners even hired planes to fly over the jam-packed NASCAR racetracks dragging banners bearing nasty messages about Ginn's real estate dealings. And no matter how dicey his empire's financial situation, Ginn keeps moving onto new projects, the latest a new ski resort at Minturn in Colorado. You have to give him credit for pluckiness at least.
The fire sale at Reunion and some of Ginn's other properties could be a good opportunity for those with patient capital. Ginn recently announced that a member at any of the company's lush golf courses will be granted reciprocal privileges at all the others, certainly an excellent selling point for golfers. The units for sale at Reunion are undeniable bargains compared with the undiscounted units next door. And Ginn amenities - where they have been completed - are top drawer. But if you buy one of these bargain-basement properties, be aware you will wind up living cheek by jowl with someone who will hate you for paying half as much as he did.
Of course, rest assured that will be nothing compared with how he feels about Bobby Ginn.
