Wednesday, August 22, 2007

Orange Beach Resort Gains Approval

Published by the Mobile Press Register
Wednesday, August 22, 2007
By RYAN DEZEMBERStaff Reporter

ORANGE BEACH -- With an altered spelling, new developers and a fresh look, the Gulf-front Mandolay Beach resort won unanimous approval from the City Council on Tuesday evening.
The project, which is planned for about 14 acres just west of where Alabama 161 meets the beach, will include a 40,000-square-foot convention center, restaurants, 412 hotel rooms and 208 condotel units -- essentially individually owned hotel suites -- in two towers, 28 and 23 stories tall.
As part of their proposal, North Carolina-based developers, working under the name Oceanway Properties LLC., will give Orange Beach a 175-foot-wide stretch of beach and build a parking lot and restrooms there. One of the developers, Chuck Starnes, said that the gifted property is worth about $22 million, and the bathrooms and parking will cost about $1.5 million to build.
In the fall of 2004, amid a white-hot real estate market, the $100 million project, then known as Mandalay Beach, was approved as a pair of 36-story towers encasing 500 luxury condominiums. From the onset, designs called for the creation of Orange Beach's first municipal beach -- a bartering piece intended to ensure approval of what would have been the city's tallest buildings.
Its developers, a group that included Gulf Shores real estate broker Rick Phillips, Coastal Builders owner John Case and Mobile businessman Robert Williams, sold more than 100 condos at prices starting at $900,000, they told the Press-Register in 2005.
Soon after, the market for Gulf-front condos fizzled. Lenders tightened the reigns, insurance costs soared, storm-wary buyers backed off and the project never got underway.
Earlier this summer one of the project's lenders, Compass Bank, sued the developers for more than $9 million it said they owed the bank. Simultaneously, the trio faced numerous lawsuits from contractors and buyers on two of their recently completed Gulf Shores condo towers, San Carlos and The Lighthouse.
"When the bubble burst, the project ... was no longer viable," Mayor Pete Blalock said Tuesday. "And basically it would have meant nothing would be coming to us."
The North Carolina developers, however, were able to recast the project and said Tuesday that they strongly believe construction of the hotel tower and an access road will be underway this time next year.
Oceanway Properties' purchase of the land was contingent on the council's approval, and financing is already lined up, said George Sheild, manager of the company. Sheild said Gov. Bob Riley's office agreed to allow the developers to use $100 million in Gulf Opportunity Zone bonds to complete the project.
The Gulf Opportunity Zone Act, offering low-interest rates and tax breaks, was enacted by Congress in the wake of 2005's hurricanes Katrina, Rita and Wilma to drum up private investment and rebuilding efforts on the storm-damaged coast.
"We're not just spending your time on something that is speculative," Sheild told council members. "We feel that we're in real good shape, that we will get the deal done."

Sunday, August 05, 2007

Gulf Shores - Resort Rentals Robust

Published by the Mobile Press Register
Resort rentals robust
Sunday, August 05, 2007
By KATHY JUMPERReal Estate Editor

Today, Marie Curren is likely operating the elevators at the 72-unit Phoenix IV condominium in Gulf Shores.
Her real job is marketing manager for Brett-Robinson, but this is one of the busiest check-in days for the real estate company's 1,943 rental units. There are 1,000 families arriving at the firm's 16 condo complexes to spend the last week at the beach before schools start.
"What's interesting is that we have 890 back-to-backs," she said. That means a total of 890 units will have guests checking out at 11 a.m., and guests arriving to stay in those units at 3 p.m.
To keep the cleaning crews on schedule and sane, and make sure guests are happy, all of Brett-Robinson's managers are pitching in to make the day go smoothly.
"We have a 97 percent occupancy, and that's about as good as you can get," Curren said.
Though condo sales have been slow, the resort rental market has seen occupancy rates in the high 90s this summer, according to rental managers.
Taxable lodging rentals reached $57.1 million for spring 2007, a $1.3 million increase over 2004's $55.8 million during the same months, according to the Alabama Gulf Coast Convention and Visitors Bureau's June report. The taxable lodging rentals in June were 30 percent higher than in the same month last year, and up 24 percent over June 2004, which was a record-setting year, said Herb Malone, president of the Gulf Coast CVB.
"That gives you an idea of what kind of summer we're having," he said. "We expect the July numbers to be even better. People are coming down in droves."
"If you can't sell it, rent it" has been a mantra for owners and Realtors since Hurricane Katrina hit two years ago. The for-sale condo inventory has averaged 3,000 units for more than a year. While renting won't pay the mortgage, it will offset some costs, agents say.
"People ask us about rental histories all the time, and we tell them the past is a good indicator of the future," said Buzz Farias of the Pro Team at REMAX of Gulf Shores. "But nobody has a guarantee."
How much rental income a condo unit will generate depends on several factors. The first two are location -- or is the unit directly on the beach -- and how much it costs to rent for a week.
"Renters want as many bells and whistles they can get for as cheap as they can get it," Farias said.
The rental income projections are based on how much the unit costs, as well as the fees such as telephone, association dues, property taxes, content
insurance and management fees, he said.
Meyer Real Estate's sales team is "very conservative" with its rental income projections, according to Sarah Kuzma of Meyer in Gulf Shores, which manages more than 2,000 condos and some 300 beach houses on the Alabama coast and Perdido Key, Fla.
The rental estimates are based on 10 weeks of revenue in the summer, three weeks in the spring, two weeks in the fall and a month or more in the winter or snowbird season, according to Kuzma. The rental rates depend on the season, with peak summer time commanding the highest rates, agents say.
For example, a two-bedroom, two-bath Gulf-front unit at Island Royale in Gulf Shores rents for $1,590 a week during the summer, according to Meyer. The unit would bring in $25,160 a year in rental revenues as a conservative estimate, according to Kuzma.
Across the street from the beach, at the newly opened Crystal Tower, a two-bedroom, two-bath unit rents for $1,380 a week in the summer. The yearly rental revenues would be about $19,406, according to Kuzma. The new condo tower has an air conditioned walkway to the beach and a pool and gazebo on the sand.
Brett-Robinson's rental staff, like many of the large firms at the beach, work on a commission basis, according to Curren. "Our pledge is that we will generate you as much income as we can."
Rental activity will drop off in August and pick back up for the Labor Day weekend, which ends this year on Sept. 3, according to Curren. Still, the Thunder on the Gulf boat race Aug. 18 and 19 has most of the rooms along the race course booked, she said. The National Shrimp Festival in Gulf Shores in October will bring crowds to the Gulf, followed by the arrival of the snowbirds in January and February.
The snowbird season could drop from three-month stays to one month in the near future, Kuzma said. "The generation that will replace current travelers will not stay put for three months at a time," she said. "We think it will be one month, if there are a lot of activities."
There are 1,636 hotel rooms and 13,169 condo units available for lease in Gulf Shores, Fort Morgan and Orange Beach, according to the CVB. Another 147 hotel rooms and 398 condo units are expected to come on line by the end of the year, Malone said.