Westwater Transformed

Westwater Transformed

By Sean Roth

Real Estate Editor

Mark Miller was nervous. Ever since he began his career in real estate in the early 90s, building waterfront mansions as Westwater Construction Inc., Miller saw the potential pitfalls. He has worked through periods when Sarasota real estate was considered practically worthless and no one would think of living in the downtown.

Yet, here he was in 2004, buying about an acre of land in the Burns Court neighborhood with hopes of developing upscale townhomes. As other upscale high-rises sprouted all around downtown, Miller still had his doubts. He was there in the lean years.

Miller's sole complaint since then is that maybe he sold his Burns Court Villas too quickly. However, Miller shouldn't judge himself too harshly; in roughly that same time period, he repositioned Westwater Construction, started a new business and bought property for his first two commercial developments and two new multi-family projects.

Starting in early 2004, Miller, 34, has shifted his $39 million home building company from waterfront home construction in favor of building homes out east in The Concession and Lakewood Ranch. In August, Westwater purchased 10 large residential lots in The Concession development for $4.7 million. Westwater is also one of ten approved homebuilders in Lakewood Ranch's newest village the 1,600-acre Lake Club.

"Lakewood Ranch is still such a power house that we really couldn't avoided it anymore," Miller says. "What so many people don't realize is that with all the single family and multifamily development it really only covers about 5,000 acres. Lakewood is a total of 20,000 acres. It is not even halfway built-out."

Westwater Construction hasn't given up waterfront construction completely; it currently has six on-going construction projects on the water. The company is just being much more selective.

"The biggest change in Westwater is that up until last year we aggressively went after every project," Miller says. "We had to take anything we could get in the door. Now we are turning down a lot of projects. Our own project provides the stability so we have that base. We own enough property to work on for at least the next 10 years."

Westwater is slated to break ground on its first home in The Concession in the next month, and should follow that in the Lake Club another 30 to 60 days after that.

Meaningful projects

Aside from single-family home construction, the sales success of Burns Court Villas has encouraged Miller to extend Westwater Construction into more of his own projects.

"We are not seeking out another developer's work right now," Miller says. "We are only working as a [general contractor] on our own projects."

First for the company is completing construction of the 23 Burns Court Villa townhomes.

"We should turn over our first set of units in December," Miller says. "We should have the rest finished sometime in early spring or late March."

Concurrent with that construction, Westwater Construction is seeking approval to build seven 27-unit condominium buildings and 11 single-family home sites in the Forest Lakes Golf Club, located south of Webber Street and north of Bahia Vista Street.

After the former owners of the 18-hole golf course ran into money problems, Miller along with other partners purchased the course. Now, the current plan calls for the developers to spend about $2.5 million to improve the course and irrigations and to develop a new clubhouse, restaurant and bar.

"This course has a lot of meaning for me," Miller says. "My first job was swimming in the ponds to find lost golf balls and selling them. This was my home course when I was on the golf team in junior high. My sister was married there. So I have a strong interest in seeing it restored."

The value of the proposed new residential construction is more than $100 million.

The Sarasota County Planning Commission scheduled the project for final review yesterday and a county commission vote on the site plan will likely be in November.

Miller and a partner are also working on plans to convert the former Churchill's furniture store, at 1551 and 1515 Fruitville Road in Sarasota, into an about 100,000-square-foot five-story office/retail building and a 350-space parking garage. Miller and his partner Chad Bratzke, formerly a defensive end for the Indianapolis Colts, purchased the property a year ago for $3.4 million.

"It's one of the last lots that is zoned for a bank drive-through," Miller says. "Right now Artisan Stone is taking half the building, and the remnants of Churchill's is taking the rest."

The development is Miller's largest of two proposed commercial office projects. The second is a 35,000-square-foot office/warehouse building at 1074 N. Orange Ave. Sarasota, which Miller purchased to co-locate his four companies: Westwater Construction, Sarasota Select Properties, Artisan Stone and the newly formed U.S. Surface Protection. Miller says he is still awaiting permitting approval to rebuild the interior to accommodate the businesses.

Miller, Bratzke and Gil Alvarez, broker and partner in the real estate brokerage Sarasota Select Properties, bought the former Unity Church of Sarasota building, at 3650 17th Street, Sarasota, to develop a group of about 30 townhomes similar to the Burns Court Villas.

"I named it Olivia's Garden after my daughter," Miller says. "She's only 14 months. It's going to have a seaside feel with metal roofs and siding. I'm hoping to start it by July."

Miller and his partners also have two new developments waiting in the wings, including a townhome project on Longboat Key and a condominium/home mixed community in the city of Sarasota.

Branching out

Aside from homebuilding and development, Miller also added several new construction-related companies. In June 2004, Miller started the new real estate firm Sarasota Select Properties with Alvarez.

"It really started marketing our properties," Miller says. "It's never going to be a Michael Saunders [& Co.]. It's always going to stay a small boutique real estate firm."

That said, Westwater and Miller's projects lumped together are far from inconsequential. Sarasota Select is projected to have sales of about $40 million for 2005.

Currently, Miller, Bratzke, Miller's brother Mike Miller and Janni Smith are putting the finishing touches on creating U.S. Surface Protection. The new business's main product is a paintable, peelable protective coating for both watercraft and construction materials.

"My brother owns a company on the East Coast [of Florida] doing yacht maintenance and detailing," Miller says. "He is one of the subcontractors to Hatteras Yachts during the manufacturing process. One of his jobs is to protect the yachts during the assembly process. So after looking for a while he found a product in the U.K.."

Miller says his brother "started purchasing so much" that the U.K. company eventually offered him the North American distribution rights. Mike Miller then brought his brother into the project.

In many ways, Miller is more intrigued by the coating's application to construction materials.

"There was a similar type of product that was recently introduced to the construction industry, and to be totally honest, I wasn't thrilled with it," he says. "It could be used in bathtubs, windows, door and marble, but it had a lot of problems. It just didn't hold up in the water and the sun. This has none of those problems. The product is just as easily removed even after a year's time."

Further, Miller says based on Hatteras Yachts current usage of the protective coating, the new company should start with an established base of about $1 million in sales.

The basis for U.S. Surface Protection is similar to Artisan Stone, which Miller and partner Terry Conti started in 2002. The main goal of that company was to bring the specialized stone, tile and marble products to Florida for Westwater Construction, and to date, the homebuilder is still Artisan Stone's largest client.

"We own a percentage of company we buy from in Mexico," Miller says. " We invested roughly three quarters of $1 million in the last six months for new supplying technology equipment. They should have that working by the end of the year."

However, even though there is shared ownership Westwater Construction pays the same rate as any of Artisan Stone's other customers. Miller says it was important to the financial health of all of the companies to separate them.

Finding partners

As for Miller's ability to handle multiple companies simultaneously, he says it comes down to the people he partners with and quality of the employees.

"My main business is construction," Miller says. "The only reason I would go into any other business is if I have top notch partners and employees to manage them for me. I don't micromanage."

These partners include Bratzke, Conti and Alvarez. As the managing partner for all of the companies, Miller's regular duty mainly entails watching the financials and keeping involved with the larger business changes.

Miller met Alvarez after building an upscale home for him in the 90s

"I hired him when he was first starting out the construction company," Alvarez says. "Just over the years we became friends and I used to be his banker."

When Alvarez got his real estate license and was looking for a company to host the license, Miller was selling Burns Court Villas. So the two decided to create the new real estate firm. Alvarez is the broker and day-to-day manager of Sarasota Select Properties.

Conti, who came to Florida to oversee the Florida service's inclusion of insurance products for American Express Financial Advisors, met Miller through Neil McCurry, president of People's Community Bank. In 1999, the two created Waterside Investment Group to develop several spec homes. The investment group is slowly being dissolved in favor of individual limited liability companies.

Bratzke is Miller's newest partner; the duo first worked together at Forest Lakes.

"Chad has been long time friend and fishing partner of mine for a while," Miller says. "He lives on Lido Key, and we met through a mutual friend. Because of the NFL, he was limited on the times he could fish, but we had similar schedules. He retired in 2004, and we spent a lot of time together, which led him to get involved in our development."

Bratzke is expected to take a major management role in U.S. Surface Protection.

As Miller has assumed more of a traditional CEO role, a director of acquisitions has been hired to look for both single-family home properties for Westwater and future development sites for Miller and his partners.

As for the future, Miller says he plans to continue to look to Lakewood Ranch and eye the occasional project in Sarasota and the surrounding area.

MILLER COMPANIES

Westwater Construction Inc.

Gross Revenue

2001 $14 million

2002 $25 million

2003 $25 million

2004 $39 million

Projected 2005 $50 million

Employees: 40

Sarasota Select properties

Gross sales

Projected 2005 $40 million

Employees: 2-3

Artisan Stone

Gross Revenue

2003 $1 million

2004 $1.5 million

Projected 2005 $2 million

Employees: 4