Don't Look Back

Don't Look Back

By Sean Roth

Real Estate Editor

In West Palm Beach real estate circles, developer Brian Tuttle easily could be known as the $50 million man. Tuttle and about 60 other investors bought about 5,800 acres of land in North Port in May for $61.5 million, or $10,603 an acre. The purchase gave the former owner, South Florida Sod Inc., a $50 million windfall after it held the land for less than two years.

Tuttle is unapologetic about the purchase price, choosing instead to look at the potential.

The 40-year-old former police officer, industrial engineer and nursery owner has been successful in six years prospecting vacant land. The business model is pretty simple: Tuttle buys raw land, obtains the proper governmental approvals for a development and sells it - if he has done most things right - for a profit.

The North Port master-planned community, which Tuttle has branded the Isles of Athena, is his largest development in acreage and price. On paper the development, based on an early submittal to the Southwest Regional Planning Council, puts it on par with most of the region's larger master-planned developments. For now, Tuttle plans 15,000 homes and residences, a hospital, at least one school, an 18-hole golf course and more than 4 million square feet of commercial space.

Second in size in the south half of Sarasota County - the 7,800-acre Thomas Ranch is larger - Tuttle's Isles of Athena has become a lightning rod in the political battle over growth, infrastructure and water.

Five months into the project, Tuttle remains optimistic. He spoke recently with Real Estate Editor Sean Roth at North Port's Old World Restaurant. Here's an edited transcript of their conversation.

Who are your 64 investors and how did you persuade them to join in?

Well, God has been very good to me. I'm a fairly affluent person and have made a lot of money without ever needing to invest anyone else's money. This deal was large enough, though, that I had an opportunity to bring in a number of investors. I had also saved enough that I felt comfortable doing the deal.

So I told a couple of friends that I was going to be holding a meeting at my house. I told them they could bring their friends if they wanted. Sixty-four people showed up. It was crazy. We almost didn't all fit. I kept having to ask people, "Hey, how do I know you?" I had expected maybe 20 or so people.

Do you hold board meetings now?

No, this is a dictatorship. I made that clear from the very beginning. These may be very sophisticated investors in other fields, but none of them has ever attempted a real estate deal as complicated as this one. So letting them invest was a rare opportunity for them to get involved in a very large land deal. That is really what makes this deal so unique. It's not the location. It's almost 6,000 acres. Where can you find 6,000 acres in the city urban boundary that hasn't been developed?

Florida Sod Inc. is financing $36.9 million or about 60% of the total project. How much do you have in the deal?

About 60% of remaining in cash and debt.

What is the interest on the note?

7%

We have heard the property is currently land locked. Is that true?

That is totally not true. There are currently four legal access points. Two roads that were put in by the GDC (General Development Corp.) One of them terminates on the southern side. We have a 100-foot road on the right of way. We have (a road) from Toledo Blade right into the property. And Lennar (Homes) also has plans to connect their development into the property. So we have three that are currently built and one on the way.

It is said you like to do more complicated real estate deals.

Not by themselves. I have a business model that has guided all the 30 some land deals I've done. They all have to fit certain criteria. First, the land has to be in the urban services boundary. Second, it has to be in a high-growth area. And third, the property purchase has to offer one of three things: an unbelievably good price, seller financing or a delayed closing.

So in this case it was seller financing?

Yes.

What do you say when people question the $50 million increase you paid to the former owner of the property.

I will never focus on what the guy I'm buying from is making on the deal. I only focus on what I can do with the property. Why should I care whether it was given to him in a will? I don't care. That is just his good fortune. I only look at what is the property worth, and fully zoned this property could by worth a $1 billion. That's certainly worth the investment.

What do you see when you look at this development. Do you see this as Lakewood Ranch or Palmer Ranch?

I see Lakewood Ranch, but only better. It's hard to say because the community is still being built out, but the Lakewood Ranch style of development is already dated. The new style of development is more of a village concept that more tightly integrates the different uses together.

Their type of development is the more traditional style of pods of housing and pods of commercial. Those communities are not self-contained. People have to leave their communities to buy a loaf of bread or a gallon of milk.

We're developing these as villages with little neighborhood centers of commercial with lots of interconnectivity.

Ultimately, that (traditional development) is more costly for residents, because it makes them so dependent on the automobile.

People should be using bikes or - since it's Florida - golf carts. In Celebration you see more people on golf carts than on cars.

The city of North Port is considering a moratorium on large-scale projects, such as yours until it can revise its comprehensive plan. At the same time, relations have been strained between the city and the county over issues like water. You just met with the city manager, what were the results of that meeting?

It was good. The city of North Port is going to do what is best for the city. Florida was set up as a home-rule state, which means that North Port will have final word.

Your development calls for about 5 million gallons of water a day. Given the current disagreement between the city and county over water usage, how do you expect to obtain this water commitment?

All I can say is that we are working with city on that. We are also exploring the potential of a well field. We are considering five or six wells that would be able to handle about 500,000 gallons a day each. It's actually much cheaper to maintain (than the Peace River system). All you've got to do is have pumps to move the water out of the ground and the appropriate filters.

You were a police officer, an industrial engineer for IBM and owned a nursery business. What impact did this have on your business outlook.

I think this job uses a lot of the skills I learned in those jobs. In the nursery business, I learned how to buy and sell a lot of land. It was when I was doing that which led me into this. It was my engineering training that taught me how to look at things analytically. And to be blunt, being a policeman taught me how not to be intimidated.

I was policeman in Palmetto when I was 18, 19 and 20. At first it was fun, and then I realized it wasn't where I wanted to go. So I went back to school to become an engineer.

With about 30 land deals completed, of which one are you most proud?

That would have to be the Sand Trail in Martin County. It was 400 acres. I put $1 million deposit down and had a year to close. I spent $500,000 on consulting fees getting approvals and flipped it to Centex (Homes) for a $29 million profit.

It wasn't easy though. It was actually one of the hardest deals to put together.

What is more important: knowing the right people or finding the right land?

Finding the land is 98% of the deal. The saying in the industry is you make all your money the day you find the land. I used to drive around all the time and look at tax maps and urban-service maps. I would talk to agents and consultants. And then there are the deals that come to you. The deal came to me. It's true. Just like the more money you have the more money you can make; the more you are known for doing deals the more deals come to you.

Who taught you the real estate game?

I really learned it on my own through trial and error. I've lost money on a lot of deals. Sometimes you put down $400,000, pay another $100,000 for consultants and walk away with nothing.

You have said in the past that you think construction on the project will start in 2007. Are you on track for that? Because of your funding, do you have a deadline you have to reach to make this project profitable?

I think we are still on track for 2007.

I don't really think there is a worry that if it goes on too long we are going to be in trouble. Because this property fits the criteria, something will happen to it. It's not like I bought this property in Okeechobee, this is North Port. It's in a fast-growing area. There is virtually no other vacant land in the city, and this is one of the few vacant developable pieces on the interstate. There is lots of raw land outside of the urban services boundary and it's cheap. But try to provide any services out there.

You've gotten a lot of flack over the fact that the county was trying to acquire the property as a preserve. How will the environment be affected by your development?

It is a misconception that this land was completely untouched. There were a 1,000 head of cattle tromping through wetlands. We plan to dedicate 2,000 acres as a preserve and restore it to a pristine condition.

Are there any master-planned communities you are look to as you create the Isles of Athena?

The Tradition on the East Coast of Florida in Port St. Lucie is very similar. This is also going to have elements of CityPlace in Palm Beach County and Disney's Celebration.

What do you see for the future of real estate development statewide?

Some people question: Is there a housing bubble in South Florida. I always say I expect demand to get even stronger. By 2012, unless someone changes the rules on development, there won't be any developable land south of Orlando. Everything that can be developed will have been.