Joyce DabbsPlease take a few moments and read the latest update written by your Treasurer Bill Shaw.
FOR IMMEDIATE RELEASE
May 26, 2021
Treasurer’s Update
Bill Shaw
I’ve just returned from an inspection of our resort. I’m trying to gauge the progress to understand when Claremont may allow contractors on property and when they intend to return the property to the Association’s control enabling owners to work on their units. And ultimately when we will be open for guests.
Attempting to estimate a completion date is complicated by even the simplest of events. For more than five consecutive days we had winds of 30 mph which prevented exterior painting. When the crew attempted to remove the carpet starting in Building One, we discovered it was attached with a black tar-like compound that turned a two-day project into two weeks. They are just now removing the last of the carpet, inch by inch, with blow torches. Fortunately, it looks like the tar adhesive was only used in Building One, and the carpet in the other buildings will come up much faster. Building Four is beginning to get dried in but obviously there’s so much to do and we all understand that’s going to take longer.
Unfortunately, I can’t tell you when outside contractors will be allowed back on property. There’s too much work remaining and too much going on with Claremont workers and staged material. They won’t agree to work around other contractors and I understand their position. This situation can improve quickly at the end of a project, as materials are consumed. I think, if we can get contractors on site in the last week of June, we’ll be fortunate. It’s such a fluid situation that it’s possible for the schedule to move up a week or back a week. We’re close to the finish line, but not close enough to tell when we will cross the line. Claremont plans to turn buildings One, Two and Three back to us at the end of June. I agree that’s possible, but I know it’s probable to get them back no later than mid-July. For that reason, I suggest you cancel reservations through the first two full weeks of July. If we are open sooner, you will have no problem rebooking for those weeks with everything here at record occupancy rates. That’s the disappointing news I get to share with you today.
As an owner of condos in Buildings Two and Three I understand the pain of returning yet another $10,000 from my checking account and the horrible disruption this creates for the families that planned to enjoy their vacation at the resort. I also understand the great financial strain placed on our family of owners that count on rental revenue to keep their dream of owning a condo at the beach alive. Believe me when I say, if there was anything any of us on the board could do to move this along faster, we would.
Today was an emotional day for me, because I could finally see what our resort will become. In 2012 my wife and I sold our home and decided to move to the beach. We bought a five-bedroom home in foreclosure at Kiva Dunes. Then we began to search for investment property next door at a run-down, dirty resort most people called Plantation East.
The parking lot looked like a bombed runway with giant craters filled with water—and that’s if the rainwater would recede. It didn’t go unnoticed to us that this ugly, little, wooden resort sat next to the most expensive property on the Gulf coast of Alabama, the Kiva Golf Club and Beach Resort. Kiva is consistently in the top 30 beach-resort courses in the United States.
Kiva currently is in pre-sale for a fourteen-story tower where condo prices start at $1 million dollars. We were literally the smallest fixer-upper on the most expensive block in town. Buying an investment property at Plantation East was a no brainer. Once I saw the return on investment, I purchased a second unit here. We were the best investment on the beach then and we’re still the best investment on the beach. We have nearly a mile of virgin beach in the form of conservation trust land to the east that will never be developed. It is only accessible by two resorts, Plantation and The Beach Club.
For twenty years the cosmetic condition of our property has artificially suppressed the value of our units. The property values at The Beach Club have always been historically double the value of our units, primarily for that reason. Prices began to change with the nearly $1M we invested in a new drainage system and new parking lots, and continued through the end of the very expensive Hardie-board project. I knew that, even though I had invested in remodeling both my units, my potential value would never be realized, because of the dated look and condition of the common areas. I knew it would be a long haul and a difficult task to get 276 owners to agree to invest the money necessary to unlock our true economic value. And then the hurricane happened and demolished our resort. None of us would ever want that to happen. No one wants to lose potentially $30,000 plus in rents, but it happened and the resort had to be rebuilt. From this destruction, the once little wooden resort, an outdated eyesore that sits on some of the most-expensive property on the coast is going to be reborn and revalued.
We’ve all seen the television shows where a smart investor purchases a house in need of tender loving care. They put the money and hard work into the property and suddenly the house is worth substantially more than they paid for it. That’s not much different than what’s happening here. We’re putting around $25 million dollars into the resort. We’re estimating the value of Buildings One, Two and Three have already increased by more than 20% and Building Four by as much as 40%. There are other macro-economic forces at work that will contribute to even higher valuations, as inflation continues to explode and interest rates for the short term remain low.
Decades of neglect have been washed away by the storm and our collection of outdated buildings will emerge as the top property at Plantation and at a par with the very best resorts on the island. This summer, for the first time, we can say our resort will look as new and as tasteful as Kiva Dunes. And next summer you should expect to see rents up 25% to 33% at our resort. Suddenly, a two-bedroom condo bringing in around $30,000 will generate $40,000. Speaking with a broker yesterday he estimated, based on the improved condition of the property, recent appreciation at the beach and the 10% valuation rule, our units will soon be selling in the high $300’s and some topping $400. If that sounds crazy, remember that before the recession we had units in our association sell for more than $360,000.
On a personal note, as most of you know I lost my wife before the hurricane. After the hurricane I walked the property in stunned disbelief. When I walked into my one bedroom that was destroyed, I couldn’t help but think of how much she loved Plantation and how upset she would have been.
In the weeks that followed I thought about giving up and selling out. It was just too painful for me. When I was approached to become treasurer, I accepted because I didn’t want to let my friends down. In time I understood that I became treasurer because I didn’t want to let my wife down. At the end of this long and difficult process the sun will rise on a beautiful new resort. Laughter will replace the sounds of machinery and I know we’ll all be very proud of what we’ve accomplished as an association. We’ll have a new resort that Robin would have been proud of. Thank you for your patience and your support. Have a wonderful Memorial Day weekend.
Here are some photos I’d like to share with you.
Note: the rails are being sanded in preparation for new paint.
Thanks & have a great evening!