Ahead of The Curve

Ahead of The Curve

By Jean Gruss

Editor/Lee-Collier

If you want to know where growth is headed, just watch The Bonita Bay Group.

The Bonita Springs-based residential developer has had the uncanny ability to spot where development is headed long before the competition, opening up virgin territory with stunning developments that draw crowds of home buyers.

Its latest pioneering effort, get this: Clewiston, a sleepy sugar town in eastern Hendry County halfway between Fort Myers and West Palm Beach. Bonita Bay Group in September announced plans to buy 502 acres from U.S. Sugar for the city's first master-planned community.

Real estate observers who used to shake their heads when Bonita Bay Group bought land in what seemed like remote locations don't doubt the company's strategy any longer. In fact, savvy investors eagerly watch their every move.

"The first time I went to speak with U.S. Sugar I got calls the next day asking me, 'Hey, what were you doing in Clewiston?'," says Mitch Hutchcraft, Bonita Bay Group's regional vice president in charge of Hendry County projects.

Speculation about Bonita Bay Group's plans in Clewiston spread so quickly that the company had to issue a news release before it signed a contract, something it has never had to do before.

Even after the company issued a news release, company officials seem a bit annoyed when questioned about this latest project. "I'd rather not talk about it," says Dennis Gilkey, the 53-year-old president and chief executive officer of the company.

But that's in keeping with Bonita Bay's strategy, which is to fly under the radar and identify land developments a long time in advance. It places heavy emphasis on research and planning, often spending six months or more to analyze the purchase before closing on the land. It's secretive work that company officials don't discuss in any detail.

"They have a very special team when it comes to research," says Frank D'Alessandro, managing partner of D'Alessandro & Woodyard commercial brokerage in Fort Myers. "They understand demographics and they're willing to take risks," he says.

When it does move ahead, Bonita Bay works closely with neighbors, environmentalists and government agencies to resolve potential issues before disputes break out or land in court.

"They're very forward-thinking," says Michael Timmerman, managing director of Hanley Wood Market Intelligence, a Naples-based residential research firm.

What sets Bonita Bay Group apart from many other developers, Timmerman and others say, is the company's ability to find pristine tracts of land and successfully use the natural environment in its marketing to attract buyers. "They've used that as a branding tool," Timmerman says. Company executives say environmental stewardship is the company's top core value.

Bonita Bay Group has teamed up with environmental groups such as Audubon International to design golf courses and other amenities that safeguard wildlife. "They're sincere about their promotion of the environment," says Nancy Payton, southwest Florida field representative for the Florida Wildlife Federation.

In 2001, Bonita Bay Group took over a development called Twin Eagles in Collier County that had been mired in lawsuits with environmental groups over conservation of wetlands and wildlife corridors. Payton, whose organization was among those suing the previous developer, says she was surprised when Bonita Bay executives came to her office to work out an out-of-court solution. "No developer had done that before," Payton recalls. Though the details are sealed, Payton says they reached a mutually beneficial agreement.

Privately held advantage

David Shakarian, founder and chairman of General Nutrition Corp. (GNC), who assembled more than 4,000 acres in Bonita Springs in 1979 and 1980, founded Bonita Bay Group. Out of that, Shakarian developed Bonita Bay, a 2,400-acre residential community.

GNC is the nation's largest specialty retailer of vitamins and herbal supplements, and Shakarian envisioned a community that would be based on the same ideals of health and wellness. He placed great emphasis on protecting the environment.

Initially, Shakarian funded the development with his personal wealth. But as the company grew it had to rely on bank financing for expansion. Shakarian died in 1984, and his son-in-law, David Lucas, a Harvard MBA graduate who was running a chain of women's specialty stores at the time, took over the family business. Shakarian's heirs, including twin sisters Linda Lucas and Louise Ukleja, still own the company. Mick Ukleja, Louise's husband, also is on the company's board of directors.

Gilkey says Bonita Bay Group has relied on financial institutions such as SunTrust Banks to finance expansion into other areas, but he declines to elaborate. The company's revenues were $200 million last year.

"We're not looking to be the biggest," Gilkey says. "We're happy to make $300 million if we do it well."

The company has five developments at various stages of development in Southwest Florida, including Twin Eagles, The Brooks in Bonita Springs, Mediterra in north Naples, Shadow Wood Preserve in south Lee County, Sandoval in Cape Coral and Verandah in northeastern Lee County.

Now, Gilkey says, Bonita Bay Group is scouting sites outside Southwest Florida for geographic diversification. Although he declines to go into specifics, he says the company is eyeing parts of central and northeast Florida, coastal Georgia and the coastal and mountain regions of the Carolinas.

"Over time, in the next five to seven years, we'd like 25% to 35% of our business in new market areas," Gilkey says. "We're on a deliberate schedule."

Observers say Bonita Bay's private ownership is a big advantage because it allows the company to bank land for the long term. By contrast, publicly held developers don't like to carry land because it's not an efficient use of capital, especially when investors demand results on a quarterly basis.

So far, Bonita Bay Group in the last five years has banked hundreds of acres of land in Lee, Collier and Hendry counties. That includes about 900 acres on Burnt Store Road north of Cape Coral in Lee County near the Charlotte County line and 540 acres on the south side of Immokalee Road in Collier County.

But Bonita Bay's biggest land play by far is in Hendry County, still home to cattle ranches, citrus farms and sugar plantations. In February, Bonita Bay agreed to buy 4,700 acres west of State Road 29 and south of State Road 80, citrus land that belongs to the Bob Paul family and which the city of LaBelle had recently annexed. The company says it will purchase the land in phases spanning possibly 20 years.

Meanwhile, in a first test of its Hendry County strategy, Bonita Bay purchased a 187-acre tract of land west of LaBelle near the Lee County line called the Berry Property. It paid about $15 million for the land earlier this year, according to property records. "That will be our first project [in Hendry County]," says Hutchcraft, who hopes to start construction next year.

The verandah to State Road 80

In 2000, the company surprised the development community again when it purchased the Baucom Ranch, a 1,400-acre cattle farm, and surrounding commercial parcels for $24 million. It was a tract in northeast Lee County off State Road 80 that other developers all but ignored.

"Some people thought we were nuts," Gilkey acknowledges.

There was a huge oil-fired power plant almost directly across the road from the ranch, and the smokestacks could be seen for miles. But Bonita Bay executives were among the few to know that the stacks would eventually come down as the plant converted to natural gas.

"We've got good local knowledge," says Gilkey.

Another drawback to Verandah was that no one had developed a new community in that area for decades. There was some concern that the area was too remote to attract buyers.

What's more, Ruth Baucom, a retired courthouse clerk who had scrimped to assemble the acreage, owned the land and was fiercely attached to it. She started buying the ranch land for $5 an acre in 1938, recalls her son, Donald Baucom.

"That land," says Baucom, "it came hard, and it went hard."

Ruth Baucom, then 82 and tired of cattle ranching, would se ll the land only if its natural beauty were preserved. Like many old-time Florida families, Baucom was worried that a developer would chop down every tree and bulldoze the property for a subdivision.

When she saw Bonita Bay's other area projects and the plans for Verandah, she agreed to sell. For example, instead of sawing down old oak trees to make way for a large clubhouse, Bonita Bay built a series of smaller structures around the trees. One is a boathouse, the other a golf club and pro shop and the third is a dining hall.

(To defer capital gains taxes, the Baucoms made a 1031 exchange for a farm in Hacoda, Ala., nine miles north of the Florida line and due north of DeFuniak Springs. Ruth Baucom died a few years ago, but her son says "she would be elated that the property looks like it does," he says.)

Despite these hurdles, Bonita Bay executives felt the land's natural beauty along the river, its proximity to Interstate 75, the airport and Fort Myers and would eventually draw buyers. Furthermore, State Road 80 was widened to four lanes. They knew the natural landscape would be a big draw, so they drew up an elaborate landscape plan that included moving 200 oaks and 1,400 Sabal Palms in strategic areas throughout the property so the community would appear to be older than it really was.

Less than a year after Bonita Bay closed on the property, the 9/11 terrorist attacks occurred. "When something like that happens, it makes people reassess their priorities," says Hutchcraft. Verandah's marketing had been designed to appeal to people who were looking for a slower pace and that fit right into the changing times.

Their efforts paid off. Bonita Bay initially had thought homes would sell from $150,000 to $300,000 at Verandah. Now, homes there start in the low $300,000 range and reach up to more than $1 million. Bonita Bay expected to sell about 200 homes per year when it started Verandah. Now, it's on track to sell 350 per year.

Dan Dodrill, a luxury homebuilder who builds million-dollar homes at Verandah, says it all goes back to the company's meticulous planning. "Their site development and initial planning was masterful," he says. "They do what they say they're going to do, which in this market is huge."

Dodrill, president of Daniel Wayne Homes in Fort Myers, initially thought he would sell his homes in the $600,000 to $900,000 range. Now, his homes start at $800,000 and go up to $1.5 million.

Now, Dodrill has purchased 220 acres across the Orange River from the Verandah project, where he plans to build his own community called Horse Creek. Prices start from $550,000 and reach to over $1 million.

With the success of Verandah, the State Road 80 corridor from Fort Myers to West Palm through towns such as LaBelle and Clewiston is primed for residential growth. Bonita Bay will be there waiting, ahead of everyone else.

Dennis Gilkey

President and chief executive officer,

The Bonita Bay Group.

Age: 53.

Family: Married, two children.

Interests: Boating, fishing.

Birthplace: Toledo, Ohio.

Education: University of Florida, Bachelor of Science in civil engineering with high honors, 1972.

First job out of college: Sverdrup & Parcel Engineers, Jacksonville, where he served as project engineer for the Jacksonville Transportation Authority.

Previous positions: From 1979 to 1984, Gilkey was project engineer with King Engineering Associates in Tampa, working on land developments in Pinellas and Pasco counties.

Positions with Bonita Bay Group: Gilkey joined Bonita Bay Group in 1984 as director of development. He became president and CEO in 1998.

Charitable endeavors: Junior Achievement, United Way, Bonita Springs Community Foundation, Bonita Springs YMCA, Bonita Springs Area Chamber of Commerce, Imperial River Conservancy, Foundation for Lee County Public Schools, Lee County Smart Growth Advisory Committee.