Diversified Interests

Diversified Interests

ENTREPRENEUR by Sean Roth | Real Estate Editor

Jes Santaularia is a business chameleon. The part-time Sarasotan has proven over the last 30 years that he can move in and out of a variety of industries and geographies.

Santaularia is currently working to grow two full-time businesses. In one business world, he's a developer creating offices, storage facilities, apartments, master-planned communities and flex buildings. In the other, he's dealing with stock market futures as the head of a $4 million hedge fund.

So is he a financier who dabbles in real estate or a developer who runs a hedge fund? He says, "It depends on whom I'm in the room with. I would classify myself as a kind of a renaissance man. I like to do just about anything if I find it an entertaining opportunity."

The larger of Santaularia's two current interests is the 19-year-old Diversified Concepts LLC, a real estate development company that operates from Lawrence, Kan., and Sarasota; it has created more than $100 million worth of properties.

The company has developed about 50 different projects in Dallas, St. Louis, northeastern Kansas, Fort Myers and Sarasota. Current projects include RockFire at the Lake, a 400-acre master-planned home development in Topeka, Kan.; a 25,000-square-foot retail building and a two-building 100,000-square-foot ASAP Storage self-storage facility in Fort Myers; and two large luxury home properties in Sarasota, the N. Shell Road House on Lido Key and the Putting Green House.

Along the Gulf Coast, Diversified Concepts also owns ASAP Storage facilities in Fort Myers and Sarasota and the Sunset Plaza and Sunset Plaza Annex row of office/warehouse condominiums on Summerlin Road in Fort Myers.

Santaularia's second company is the barely two-year-old Parrot Trading Partners LLC hedge fund. The company manages a portfolio of both long and short positions in the S&P index.

"Most of our investors look at us as a way to offset some of their downside risk," says Santaularia, 53. "A good metaphor for what we do is we sell insurance. If someone thinks the market is going to go down they can buy insurance that way. Another group could also buy insurance that it's going to go up. We sell both instruments.

Charlie Santaularia, 22, one of Jes Santaularia's sons and the chief operating officer for Parrot Trading Partners, says for the fund's first 20 months, ended Dec. 31, 2005, it claimed net profits to investors of 15.89%.

"Right now we are probably down a few points from that figure," Jes Santaularia says. "For the total 24 months since we came public, we are probably up 20% or so." The fund's largest single investor is a convent, which has invested $875,000.

While Santaularia boasts of good returns with the hedge fund, there are some in the financial industry who frown on the investing tool. A mutual fund manager from a prominent national firm, in competition for investing money just like Santaularia, recently spoke to a group in Tampa about the pitfalls of the mostly unregulated hedge fund industry. (See story on page 8).

Still, for Santaularia, mutual funds are just one aspect of his business strategy.

Storing ideas

Santaularia acknowledged the Diversified Concepts name stems from his habit of industry jumping.

"I've been in a lot of different business," he says. "I don't anticipate that would be changing any time soon."

The name for the hedge fund comes for his wife's pet bird, a Macaw named Corky and Santaularia's affinity for the initials PTP, or prime time player.

Handling two different businesses at once has been a trademark of Santaularia since his introduction to entrepreneurship in 1974.

With the economy in a recession, Santaularia, who had just received a bachelor's degree in business administration from the University of Kansas, decided it was an opportune time to continue on for an MBA. There was only one problem; Santaularia was bored with school.

He was helping his grandmother find some investment property when Robert Moore, a property owner he only slightly knew, offered him an unusual deal: Moore offered to sell Santaularia the historic Eldridge House in Lawrence, which was being run as an apartment building, for nothing, as long as he would run the restaurant on its bottom level. Santaularia decided to take the chance that he could improve the operations.

It worked. When he sold the building in 1982, he made $100,000.

After Santaularia sold the restaurant, he went back to his alma mater and later became a CPA. In 1986, he started an investment, financial advising and tax-preparation firm. A year later, he started a development firm in Lawrence.

His first project was a 30,000-square-foot self-storage facility. Once that was fully occupied, Santaularia constructed an additional 40,000 square feet next door.

In the mid-'90s, Santaularia bought a condominium on Lido Key and his development interests followed him down to the Gulf Coast.

After more than a decade in the area, Santaularia has just nine properties, a low number considering the level of business he's done in other parts of the country. But Santaularia has sold some properties over the years to cash in on the demand. Also, and more important according to Santaularia, is that he doesn't like the current market. He calls himself an unapologetic garbage man in his approach to property acquisition, as he targets foreclosed or otherwise troubled properties.

"I think the market today is really overvalued," Santaularia says. "I buy more in the downturn, and I think there will be a whole lot more opportunities soon. I look at things like the condo market in Sarasota, which is tremendously overbuilt and see a fire sale in the not too distant future."

Diversified Concepts

Year Gross revenue

2003 $7 million

2004 $8 million

2005 $9.5 million

Projected $11 million