Financing helped Brunswick Forest stay strong
December 24, 2010Brunswick Forest
Greater Wilmington Business Journal
By: Teresa A. McLamb
In the wake of the nation’s housing downturn, the key to continued success has been developing a solid plan with solid capital resources, say developers at Brunswick Forest.
The 4,998-acre tract is being developed by Brunswick Forest LLC and Funston Land & Timber LLC. Those two companies are essentially owned by Winnabow native Jeff Earp and Lord Baltimore Capital Corp., whose president is Wilmington native Matt Long Earp’s former roommate at NC State.
Earp said he chased the property fronting U.S. 17 near Leland for “quite a long time” before reaching a deal with International Paper. He brought Long’s company into the deal. Alan Kerry, president of the real estate division of Lord Baltimore said his company’s commitment to the project included a “very large initial funding commitment” to build infrastructure well ahead of any revenue generated by sales. “We knew a message of rock solid developer resources and promises kept was an important one,” Kerry said. “You have to sell a reality as opposed to a promise. The community is vibrant, growing and – most importantly – securely funded.” It is also debt free. Earp said the developer’s total investment to date exceeds $200 million.
Kerry emphasized that the most successful developments are those that are able to put into effect the lifestyle and amenities up front. Brunswick Forest’s completed amenities include an 18,000-square-foot fitness and wellness center, 18 holes of a planned 27-hole golf course, parks, trails, a boat launch and extensive landscaping.
Enhancements to existing landscapes and additions of other amenities have been possible because of the strength Lord Baltimore brings to the project, according to Fleming Gibson, vice president of development. “We had the ability to change the presentation in some areas, to improve on subdivisions” and the aesthetics of lake banks. He’s added park areas and made improvements requested by property owners. The project has more than 100 miles of paths and trails.
With the purchase of the tract came IP’s approved PUD that allowed 10,000 housing units, Earp said. “When we annexed into the town of Leland in 2004, we were vested with that PUD.
The planned units have been decreased to 7,500 to 8,000, and the lot sizes have been modified in some areas. Essentially, he said, they knew that the master plan could not be realistically viable for a 20-year-or-more program without constant revision.
In addition to the golf course and other recreational areas, the plan includes a commercial section and eight residential areas with phased build-outs planned. Eighteen holes of the Tim Cates-designed course are complete and operational. Construction of the other holes, which are laid out, will be completed when the market demands.
The master plan is reviewed and potentially modified on an annual basis. “[But] we’re getting to a point that there’s not a lot of tweaking to the land anymore with the golf course and amenities in place.” What can be tweaked are the internal parcels. “For instance, 110-foot lots are no longer being requested” as they were when IP created the master plan. Earp said large golf course lots were popular in the 90s, and a selection of those have been kept in the current plan, but others have been changed to meet customer desires for smaller lots.
Some initial planning was guided by geography. The railroad and the power line rights-of-way mandated some divisions. Research also helped.
“We realized in 2006 that high-end, million-dollar homes on a golf course was not the market we were looking to offer,” Earp said.
“We gravitated toward a highly amenified active lifestyle community that featured mid-range price homes.” Home sites at Brunswick Forest average $100,000, according to Jerry Helms, director of sales and builder liaison, with a range of $74,000 to the mid $200,000s. The average home price is $359,000 with a range of the mid-$200,000s to more than $500,000. Four neighborhoods are on line with varying housing styles from low-maintenance townhomes to custom single-family homes.
Those prices and styles are directed by the market. “We look at where our demographic is coming from and what they see as important to their style of living,” Helms said.
“We have a very active program with our builders in that we look at what’s important to clients from a value standpoint and things that are non-negotiables such as private outdoor living space, master baths, walk-in closets, granite countertops.”
Responding to customer needs, price points have gone down since the inception of the project. “We’ve found folks are more value-conscious,” Helms said. “The larger 3,500 square-foot homes have become less of a requirement.” The average home size is now 2,400 square feet with an average price of $350,000 to $360,000.
“We found that the person purchasing that home may have spent $450,000 back in 2004 or 2005, but they’ve said ‘If I can still get those things that make my home unique in that price point, then that’s the place I see myself.’ Our builders have been nimble enough that they’ve been able to take the 2,700 to 2,800 square-foot home and readjust it to a 2,400 square-foot home to meet the price point and not reduce the fit and finish of that home.”
The most popular interior plans call for a master bedroom suite on one side of the house with guest rooms that may double as office space on the other and a kitchen/living area in the center that flows to outdoor living space. “This is the deepest style of home that we offer.”
Every visitor to the property is sent a 24-question survey about desired lot size, view, price points, number of bedrooms, baths, etc.
The data figures heavily into the ongoing project review. “My personal opinion is that it’s arrogant to tell the customer what they should have,” Kerry said. “We knew it was important to see what customers want.”
Four neighborhoods are currently being offered, one of which is on the golf course. Gibson said his plan is to concentrate on the inventory in those sections, but research has led to the offering of one new product which they’re calling a coastal cottage style. The smaller home will fill a need for a single family vacation home as well as for those who wish to downsize. “I can envision golf buddies coming down,” Helms said. “Also, our average age is 55. It offers them the opportunity to move their parents down.” The open style is designed to allow for comfortable aging in place, he said.
Another decision that has helped the project is the hiring of Kemper Sports Management to run both the golf course and the wellness center. While IP’s plan leaned toward passive recreation, we’ve embraced an active lifestyle, Earp said. “Providing activities on a daily basis for folks to do has been a strong part of our success. We are active in creating new opportunities for folks to gather and participate, and we work pretty hard at that. We’ve seen it in other parts of the country, and we have emulated it.”
Having Kemper in place to facilitate activities has been key. “The health and success of a community this size can’t just be about what the development core brings forth,” Helms said. “We can create the sense of place, but our residents have more than 50 different clubs they’ve developed themselves. We have the fortune of having a professional sports management company that can take the idea of the Joneses for a cooking group and help facilitate the structure of that.”
On the commercial side, the popular plan in the 1990s was for a power center such as a Wal-Mart/Lowe’s combo, and Earp suspects that’s what IP had in mind. “We moved towards a more intimate village” of 160 acres “that was anchored by a grocery store. We’ve redesigned the commercial section as a village in overall keeping with the development theme. All things considered, we’re pretty pleased with the way the village has progressed,” he said. They have signed a lease with Lowe’s Foods for the grocery store and adjacent shop space. An opening date is expected to be announced this month. CVS, which purchased an outparcel, plans to mirror Lowe’s opening date. Hampton Inn, which also purchased an outparcel, is watching the market, Earp said.
The developers have built and leased a 40,000 square-foot building to New Hanover Regional Medical Center and smaller sites were self-developed and leased to Port City Java and the Brunswick County Sheriff Department. A dentist office is also open.
Franks Theater, which announced their intention to build more than a year ago, ran into financing issues, Earp said. They had a verbal agreement, not a contract. “We wanted them to proceed. The area would like to have and needs a movie theater,” Earp said.
“They would like to be in this area. I think when credit markets free up a little bit, they likely will be.”
As for future plans, Earp said they would like to have a full service convenience store, a variety of restaurants – both chain and local – and additional medical opportunities. “We are working with what I would call two major retailers,” he said. “There is a lot of land left for creativity.”
For its part, Lord Baltimore intends to be involved through the end of the project, whether it’s 15 years or 20 or beyond. Kerry, who divides his time between Baltimore and Leland and has a home at Brunswick Forest, said this project is the company’s largest among others in California, Alabama, the Carolinas, Tennessee and elsewhere. He makes it a point, as does Earp, to be out on the project, interacting with property owners. “It’s important for us to not be faceless and nameless. I want the residents to know us.”
If there’s a theme to the development project, it’s that “we’re constantly evaluating ourselves against our competitive set locally and outside, as far away as Colorado, to pick up on sustainable trends and debate those trends, then execute based on our team discussions,” Earp said. “It’s a learning experience for us all.”