Residents Reject Kolter Group’s $500M Offer for Oceanfront Trailer Park
By Julia Echikson April 24, 2023 5:18 pm
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Residents of an oceanfront mobile-home park in South Florida rejected a $503 million buyout offer from The Kolter Group.
Nestled between some of the country’s most expensive ZIP codes, the Briny Breezes community spans 43 acres, housing 488 mobile trailers on a barrier island in Palm Beach County. Structured somewhat like a co-op, each homeowner owns between 20 and 80 shares in the Briny Breezes township.
The proposal — which totaled $502,496,000 — averaged out to just over $1 million per owner, but residents deemed it too low and rejected the bid last Thursday, the Coastal Star first reported.
Kolter executives “thought they were going to eat us like lunch meat,” James Arena, a real estate broker who grew up in Briny Breezes and still resides there, told Commercial Observer. “But $500 million is a joke. We literally laughed at them” at the Thursday meeting.
The bid may sound like a lot, but it was less than the price offered 16 years ago — well before the pandemic boost to South Florida’s already hot real estate market. Back in 2007, residents agreed to sell the land for $510 million to a joint venture that included Jorge Perez’s Related Group. But in the aftermath of the 2008 financial crash, the investment group pulled the offer.
Kolter’s proposal, according to Arena, included only a $50,000, non-refundable deposit, which would have been divided among shareholders, as well as a three-year due diligence period. Those clauses irked residents. A major development could face opposition from neighbors, whose single-family homes are worth in the tens of millions of dollars. The area is also populated by low-rise apartment and condo buildings.
“We’re not interested in taking the risk,” Arena said.
The Kolter Group had also not directly met with all residents. The Delray Beach-based developer is well known in South Florida. Late last year, Kolter secured a $240 million construction loan for an oceanfront condo tower in Fort Lauderdale, despite the rise in interest rates, which tightened the lending market.
A spokesperson for The Kolter Group declined to comment. Briny Breezes town officials did not respond to requests for comment.
Briny Breezes’ homeowners aren’t opposed to selling their property to developers, Arena said, but any buyer will have to pay a hefty price. “It’s not just 43 acres on the Intracoastal. This is a township in Palm Beach County where the developer controls the master plan.”
Kolter’s $500 million bid comes as developers are eyeing buyouts of aging waterfront properties as they face mounting costs. Following the deadly collapse of the Champlain Tower South condo two years ago, the Florida legislature passed laws essentially forcing condo owners to pay for expensive building repairs.
Compounding the costs are rising insurance premiums. A slew of insurance carriers have either declared bankruptcy or dropped policies in the Sunshine State after Hurricane Ian made landfall last year. The Category 3 storm is likely to become Florida’s most expensive recovery.
The buyouts allow developers to build along the water, which still commands top dollar among homebuyers. But such deals remain difficult to close because the vast majority of unit owners must agree.
The largest buyout underway is now Castle Beach Club, a 570-unit oceanfront condominium in Miami Beach. David Martin’s Terra offered $500 million to acquire the property, which sits on 4 acres. Condo owners are considering the bid.
Julia Echikson can be reached at jechikson@commercialobserver.com.
