Syd Kitson's Babcock Ranch, 'City of Tomorrow' near Fort Myers, meets rough economy
A tough economy hits the planned Babcock Ranch development near Fort Myers. The 2006 land deal involved 91,000 acres of ranchland once owned by the family of Edward Babcock, a former Pittsburgh mayor. Developer Syd Kitson, 53, almost lost the property and project in August. (Rendering courtesy of Kitson & Partners.)
Wake up and good morning. Remember the cutting-edge promise that was to be Babcock Ranch? In 2009, the St. Petersburg Times described how former NFL football player-turned developer Syd Kitson planned to turn Babcock Ranch into a city of nearly 20,000 homes powered entirely by solar energy. Nothing like that (at that time, at least) existed in the United States, possibly the world. Read the 2009 St. Pete Times story here. Kitson even earned attention from Time magazine that same year.
Well, no surprise, Kitson's struggled along with the rest of the world in this economy. The Wall Street Journal reports that the project near Fort Myers has faced numerous setbacks. The company Kitson (photo, right) helped found, Kitson & Partners of Palm Beach Gardens, in August faced losing control of the property when $100 million in securitized debt came due. But rather than hand the property back to its lenders, as many developers have done in similar situations, Kitson came up with $48.2 million in fresh equity that was used to pay off the debt, according to the Journal.
In turn, the special servicer managing the debt, Capital Trust Inc., agreed to take a big loss by writing the debt down by $51.8 million, according to Trepp LLC and Morningstar Inc.'s structured credit ratings unit. Capital declined to comment to the Journal.
Stated Tom Hoban, a Kitson managing partner: "No one here is high-fiving. We feel terrible that investors lost money. But a lot of people might have just thrown the keys back or filed for bankruptcy. It's a substantial check that got written, and we're all taking a new risk."
How much Kitson, whose NFL career included time with the Green Bay Packers and Dallas Cowboys, paid for the Babcock land in the first place was not known in 2009. But the Journal story says Kitson paid roughly $500 million for all of the land, citing "a person familiar with the transaction." Then, the paper reports, Kitson sold about 74,000 acres, which will be protected from development, to the state and local governments for about $350 million. So that leaves roughly 17,000 acres for Kitson's long-term plan for a "smart city" of 50,000 residents with its own solar-power plant and such potential features as automated public transportation.
Read the Wall Street Journal (subscription required) story here.
Let's hope Kitson has staying power and access to deep pockets. Babcock Ranch, whose web site calls it Southwest Florida's City of Tomorrow -- how prophetic is that? -- will need it to suffer this period of weakness, especially in southwest Florida.
-- Robert Trigaux, Business Columnist, St. Petersburg Times