Plans for Babcock Ranch call for incorporating preservation areas.
For more than a year, developer Syd Kitson has talked about how his company will be ready to start building the community of Babcock Ranch just as soon as the housing market recovers. The prolonged slump, however, has pushed the anticipated start back a year to 2011 and forced nine layoffs at Kitson & Partner’s Port Charlotte office. The fortunes of the planned 19,500-home, 18,000-acre project are also entwined with those of Morgan Stanley, a 50% partner with Kitson in buying the Babcock Ranch land for nearly $700 million three years ago. Morgan lost $2.36 billion during the fourth quarter of 2008 and saw Moody’s downgrade its long-term senior debt rating from A1 to A2.
Kitson insists that Babcock Ranch, located in Lee and Charlotte counties, is on course “full steam ahead” and the layoffs had nothing to do with any pressure from Morgan Stanley. “We’re just trying to be very thoughtful about the dollars that we’re spending,” Kitson says. “These are very difficult times, and we want to be certain that when this market does recover that we’re ready to go.”
Most of those let go were planners, including Rick Joyce, Babcock Ranch’s one-time director of ecosystem sciences. Before joining Kitson & Partners, Joyce was director of Lee County’s Division of Environmental Science. Reached after he lost his job, Joyce says he’s contractually barred from talking about the ranch, including any views on how the layoffs may affect the project. Kitson says the impact is lessened by the fact that much of the project’s planning work has already been completed.
Kitson, meanwhile, remains bullish on Florida land. Backed by a Chicago private equity firm, Kitson & Partners has $750 million to spend — a situation that Kitson says might not be as much fun as it might seem. “You’ve got a situation where values are falling so rapidly and the market changes on a weekly basis and so we have been very challenged to really find the right matrix,” Kitson says. “When we feel that there is some stabilization, we’re going to be ready to move in and invest.”