Developers Amass Condo Building Sites

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March 19, 2006

Developers amass condo building sites

By DONNA CALLEA
Business Writer

In October 2003, Lori and Dominic Capretta paid $75,000 for a small concrete block house in South Daytona, built in 1945.

Their neighborhood, consisting of seven houses on two streets off Ridgewood Avenue, adjacent to a trailer park, was not what anyone would call fancy or particularly desirable -- except for the fact the Halifax River flows behind most of the backyards.

So when a local developer named Gus Spreng, whom Lori Capretta describes as "a wonderful man," paid the couple $130,000 for their non-waterfront property on May 6, 2005, they considered it a good deal. They knew he was planning a riverfront condominium project, and needed their property, their neighbors' and the trailer park to do it. A single-story office building on Ridgewood also was part of the plan.

"I think he was very generous," said Capretta in an interview from Lake Jackson, Texas, where she, her electrician husband, and their children have since moved. And she didn't change her opinion upon learning that less than two weeks after Spreng bought her house, he sold the Capretta property for $1.19 million to Lady Godiva Investment Holdings LLC, a company in which he's a principal.

Spreng, who declined to comment for this story, also represented the neighborhood's property owners in his bid to get zoning changes approved by the South Daytona City Commission last year. In September he got the nod for a 6.2-acre project featuring an 18-story building with 372 units.

But it turns out that neither Spreng nor Lady Godiva Investment Holdings LLC -- whose other principals include New Smyrna Beach gastroenterologist Mark Nagrani (who couldn't be reached for comment) -- will be the developers of the as yet unnamed waterfront condominium. When a condo eventually rises on Ridgewood Avenue at Palmetto Avenue and Murray Way, where the former homes of the Caprettas and their neighbors are now vacant and boarded up, it will be under the direction of someone else.

Last month Spreng made his final purchases for the deal-- $2.5 million for the trailer park, and $910,000 for the last waterfront house in the neighborhood. And then he and Lady Godiva Investment Holdings LLC sold all 6.2 acres to a partnership called 3131 S. Ridgewood Avenue LLC for $24.5 million.

It's called flipping-- on a grand scale. And it's far from unusual these days as oceanfront and riverfront land become highly sought after commodities for condominium development.

"We like this part of Florida," said Nat Plotkin of 3131 S. Ridgewood Avenue LLC, in a recent interview from Connecticut. Plotkin is actually a principal of a real estate development company called Terra Mark that is partnering with UrbanAmerica, a New York-based minority controlled investment firm, to build the South Daytona condo on the property Spreng acquired.

"We think this is a very fair price," said Plotkin, noting the cost to build on the water in other places is much higher.

Another recent flip involved a turnover of three developers in less than two years.

The proposed Bellagio condo at 1751 S. Atlantic Ave. in Daytona Beach started as the brainchild of Maitland developer Bob Thollander and his partner James Humphrey in Columbia, Md., who have a number of projects in the works in Volusia County.

In 2004, Hollander began acquiring mom-and-pop type motel properties on the beach.

The key was to get four together for each condo that Thollander planned, said Richard Stanley Cagan of Ormond Beach, who brokered the deals.

By February 2005, Thollander had what he needed and was shepherding both the Bellagio -- planned as a 19-story luxury building with 128 units -- and a nearby project dubbed the Milan, through city hall hurdles. It was estimated at the time that construction on the Bellagio might begin as early as July 2005. Instead, the unbuilt Bellagio was sold to Ambling Development of Valdosta, Ga., last May for $12.4 million, and the Milan project to Milan Developers of Tallahassee for $13.6 million.

"We buy the property with the intention of building to completion," said Thollander, who does not like to be called a flipper. "But when someone is willing to pay a lot more, we'll entertain an offer," he acknowledged.

It turned out that the Bellagio's new owner also was willing to entertain offers.

Last month, the Ambling Group, through its affiliate Valencia Daytona LLC, sold the Bellagio property to WCI Communities in Bonita Springs for a whopping $23 million.

Developers are "flipping things all over the place," said longtime area condominium developer Jim Mack of Volusia Properties, who recently flipped his company's Key Largo project in Daytona Beach Shores.

But he's not a big fan of the process, which he said his company rarely does, and he has "mixed emotions" about selling the project he worked on for three years to another developer.

"I would still prefer to develop it," he said. "But our partnership is only in business to make money."

Mack's company paid $6.3 million for the oceanfront property at 3167 S. Atlantic Ave., where a luxury 11-story condo is expected to sprout. In a deal that's set to close in May, JMC Communities, a St. Petersburg developer, has agreed to pay about $11 million for the Key Largo land, Mack said.

It's a given that when developers pay big bucks for land, the resulting condo units have to be priced in sky-high ranges that make their investments profitable.

But "the market is very soft at the moment," said Mack. "There are not a lot of phone calls, and sales are slow. . . If you look at the inventory that's left, they're all in the million or up range."

Compared to other coastal areas, "we are a bargain" for developers, Mack acknowledged. "But you still have to have a buyer (for each unit) and it's still a limited market."

How long big-time flipping can go on, and how many luxury condominium units the area can support is anyone's guess.

But there's no doubt lots of money is being made by savvy flippers.

Lori Capretta said she and her husband came out ahead, too. And she has no problem with the fact that Gus Spreng and his investors made millions flipping land in their old South Daytona neighborhood.

"He paid top dollar," she said. "If he can sell for top dollar, that's the freedom of America."