For Sale: Montana’s Engwis Ranch

Three and a half miles of the Yellowstone River course through this 5,500-acre ranch, which features stunning views of the Absaroka, Beartooth, and Crazy Mountain ranges. A Yellowstone Valley gem, the Engwis features 900 irrigated acres, all mineral rights, significant water rights, and a 9,500 S.F. main residence. A newly constructed indoor riding arena also includes an attached guest house.

$15.5 million
(970) 769-8989
www.engwisranch.com

For Sale: Georgia’s Chinquapin Plantation

With six ponds, a kennel, and multiple dwellings in the Red Hills Plantation Belt, Georgia’s Chinquapin Plantation is a superb Thomasville-area estate with 1,318 acres that include more than five miles of the Ochlocknee River. Located approximately four miles from downtown Thomasville, neighbors include Greenwood Plantation and Labrah Plantation.

The 18,000-square-foot residence was constructed in 1910 for Standard Oil heir John Archbold and includes 7 bedrooms and 6.5 baths. A guest house stands adjacent to the main residence and six tenant houses can also be found on the property.

Originally listed for $28 million, it is now available at a 50+ discount and is an ideal candidate for a conservation easement.

$12.9 million
(850) 508-2999
www.Chinquapin-Plantation.com

Bank of America Buys Kluge’s Virginia Estate

Bank of America paid $15+ million for Patricia Kluge’s legendary Virginia horse country estate at a foreclosure auction on the steps of the Albemarle Circuit Court House in February. The lender filed a foreclosure lawsuit last month after Kluge defaulted on $23 million in loans.

Among the bidders were representatives of Donald Trump from the law firm of Skadden, Arps, Slate, Meagher & Flom. Trump has already acquired 200 acres abutting the 100-acre estate and is rumored to be negotiating for Kluge’s 900-acre winery.

Completed in 1985, Albemarle is an eight-bedroom, thirteen-bath manor and was originally listed with Sotheby’s International Realty for $100 million in 2009. The price subsequently dropped to $24 million.

Harry Patten Honored By Horatio Alger Association

“Let me tell you a story.”

It’s the signature line of real estate pioneer Harry Patten (shown here with much of the Patten clan). No matter if he’s addressing industry leaders, encouraging his companies’ managers, or explaining business fundamentals to school kids visiting the Patten Family Foundation’s Finance Park at the Junior Achievement World Huizenga Center, it’s the way Harry shares a lifetime of insights and experiences.

Effective storytelling is an art, a crucial means of conveying concepts and instilling purpose, and one of its greatest practitioners was the American author Horatio Alger, whose “rags to respectability” novels featured poor boys who made good through “pluck and luck.” Over a century ago, Alger published more than 100 of these stories, and their impact was such that in 1947 the Horatio Alger Association of Distinguished Americans was formed to build on his legacy. To date, the association has awarded $87 million in scholarships to at-risk students who were determined to earn a college degree. It also recognizes leaders who, like Alger’s heroes, have risen to great heights from humble origins “through honesty, hard work, self-reliance, and perseverance.” Ray Kroc has been honored by the Horatio Alger Association. So have Bob Hope, T. Boone Pickens, Oprah Winfrey, and Tom Brokaw. In April, this distinguished group will be joined by 11 new members, including Leonardo DiCaprio, Michael Bloomberg, and Harry Patten.

Harry’s own story took shape five decades ago when he single-handedly pioneered the development, marketing, and sale of rural land. To hear him tell this tale is to marvel at the characters he has befriended throughout his career, individuals such as the brilliant mutual fund manager Sir John Templeton, whose investment acumen helped propel Patten Corp.’s 1985 IPO and made it the third-best percentage gainer on the New York Stock Exchange the following year. Templeton’s investment in Patten Corp. and his subsequent interest in owning land became the springboard for a valued friendship. The memory of another key ally, a former board member who played a crucial role in Patten Corp.’s success, brings to mind the current real estate market. “One of the reasons we’re very, very aggressive about buying land right now is that it reminds me of the opportunities in Texas in the 1980s. It was John Connally who opened up my eyes to the great values there. My son, Michael, and I went down and looked at a lot of real estate and a lot of ranches and eventually purchased our first Texas ranch from Gov. Connally. Back then was a great buying opportunity, and today’s market has the potential to be just as good. Or even better,” Harry says.

The Patten family’s ties to land date back to the Great Land Rush of the 1890s. The family homesteaded in North Dakota, but harsh winters and hostile Indians forced them back east. But Harry Patten Sr. had caught the land bug. In 1899, he paid $20 for his first parcel: 300 acres in Eastern Massachusetts. “My dad was a trader who bought and sold land, cattle, horses, timber. I was born being in business. He drilled it into me,” Harry says. This training led Harry to single out two factors: an endless stream of Bostonians and New Yorkers who wanted to own a few acres, and rural New Englanders who had their life savings tied up in farms but didn’t know the first thing about marketing. In stepped Harry Patten.

When Harry took his company public in conjunction with Drexel Lambert in 1985, annual sales rocketed from $18 million to $33 million and then $76 million. By 1988, revenues eclipsed the $100-million-mark. The Wall Street Journal described the rise of Harry Patten in a front page profile that ran above the fold:

“Sometimes it’s a place in the woods, a few hours’ drive from Boston and New York, where yuppies can rough it in their L.L. Bean boots. Other times it’s a pristine view of a sparkling Maine lake, a panorama of Vermont’s Green Mountains or a plot outside a picture-post-card Adirondack village. No matter. What’s important is that ‘people develop an emotional attachment to a piece of land,’ says Mr. Patten. ‘That makes it easy to sell.’”

Patten Corp. (now the publicly-traded Bluegreen Corporation) and National Land Partners/National Timber Partners, Harry’s current companies, have generated billions in revenues thanks to sold-out developments in 48 states and several Canadian provinces. But many current opportunities have little to do with the Pattens’ original business model. Nowadays, Harry and Michael, along with grandsons Brian and John Patten, sift through opportunities forwarded by bankers, other lenders, and even former competitors. While bankruptcy protection has become the refuge of some companies, the Pattens are working with hedge funds, pension funds, and international investors. Their lengthy track record and strong financial statements affirm their industry-leading status.

A new chapter in Harry’s story is titled the Patten Family Foundation. Harry’s philanthropy supports organizations that focus on health, education, and financial literacy. A particular passion of his has been educating children about the free enterprise system through Junior Achievement. The foundation funded Finance Park at the Junior Achievement World Huizenga Center, which opened in 2009 and now educates over 40,000 students per year. Harry is also a long-term supporter of Massachusetts General Hospital, and his foundation remains actively involved as the hospital expands its facilities and conducts major medical research. Recently he was asked to serve on the President’s Council at Massachusetts General. With his daughter Andrea, he co-wrote What Kids Need to Succeed, a book that outlines the four foundations of adult achievement: perseverance, hard work, discipline, and giving back to one’s community. What Kids Need to Succeed has been translated in four languages.

But Harry has no time to slow down. His deal-making acumen recognizes enormous opportunities in the current market for his family-owned businesses. An ever increasing number of entities seek to partner with him in new and promising ventures. And the success of his philanthropic efforts only makes him want to give more. “There are too many opportunities out there for me to even think about retiring,” he says.

Then he quickly adds, “Which reminds me … let me tell you a story.”

Ask the Expert: Andy Smyth

Andy Smyth is a straight-speaking man, runs a great brokerage business in Idaho, and has become a good partner with The Land Report. Andy recently told me that after experiencing a downward period in the land market the likes of which he’s never seen before, he is finally seeing signs of things turning around for land deals in his neck of the woods.

We asked Andy if he would mind us picking his brain a little bit, and he obliged.

Land Report: What got you into the land business, and how long have you been at it?

Andy Smyth: I was born into it. My great-grandfather Smyth sold his farmland near North Platte, Nebraska and moved to the Boise Valley in 1905. He, my grandfather, my father, and I farmed in this valley from then until the spring of 2008, when I retired from active farming after 34 years. My endeavor in real estate marketing began about 12 years ago as a diversification to my farming business. It seemed a natural outgrowth to my many years of involvement in various agricultural organizations and community service organizations throughout the state of Idaho.

Land Report: What’s are the biggest changes you have seen in your 12 years of marketing property?

Andy Smyth: The first was the run-up in land values beginning in the mid-‘90s that lasted until about the first half of 2008. The second was the decline in activity from then until very recently. During the first period I referred to, it was fairly easy to move land parcels. Since the end of ’08 and beginning of ‘09, it has become very difficult to move large parcels. It now requires a high level of persistence and focused advertising to attract interested buyers with the ability to “write the check.”

Land Report: You mentioned to me the other day that the market seems to be on the up-tick in your area. What are you experiencing?

Andy Smyth: In the last month, mid August until today, I have received more inquiries than I received since the first of the year. I have had several investor groups contact me with inquiries about large parcels. I have had numerous individuals inquire about agricultural properties for investment and primary use purposes. I have had two ranch showings in the last 10 days and another scheduled for the end of this week. I have had four inquiries in the last 24 hours. I have not closed a deal as a result of this activity, but if this rate of inquiry continues, there is bound to be a resulting close coming. I am confident.

Land Report: Tell us about some of your top current listings.

Andy Smyth: I have a number of ranch/recreational/investment quality properties available.

- A 6,080 deeded acre parcel within 1.5 hours of Boise is an exceptional property offering outstanding hunting of all types. It contains 700 acres BLM permanent lease acres adjacent. It is one contiguous parcel in a private setting. Year-round stream, 300-acre reservoir within 1/4 mile of boundary. No buildings.

- A 1,700 deeded acre parcel, offering adjacent permanent lease land access to an additional 5,600 acres. This is a beautiful parcel offering timber at higher elevations and year-round streams. Home, shop, etc.

– 2,646 deeded acres. 1,640 acres BLM permanent lease adjacent. 2 mile by 2.5 mile parcel running to the top of an 8,748 foot peak. Great hunting, access. Irrigation well. Home, shop, etc.

Pictures, more information on these parcels, other available properties at www.smythfarms.com

Land Report: What do you consider your unique strengths as a listing broker?

Andy Smyth: My many years as an active, full-time farmer myself, allows me to fully understand the elements involved in selling the family farm or ranch. I am able to empathize in a way that some brokers can’t. My priority as the listing agent is to protect the interests of the party selling their ranch or farm. I spend the money required to advertise in a way that many brokers do not. Representing the type of property that I do, requires a willingness to advertise in venues where the folks who have an interest in this type of property and who can “write the check” may be found. Not all brokers do this.

That’s why I advertise in The Land Report. It’s an invaluable tool in securing new listings. It is an impressive, high quality publication. When a potential listing client sees my ads in recent issues of The Land Report, it is obvious to them that my commitment to represent their property in a serious way is beyond question.

Land Report: From the buying side, what does your brokerage offer newcomers to your markets?

Andy Smyth: I come from a world where a person’s word is their bond. My role, as someone helping a potential customer select a property, is to provide honest, straightforward information. My responsibility is to provide correct, unbiased answers to their questions so they can make an informed decision regarding what is in their best interests. I take my role and responsibilities very seriously.

My long history in the circles of the ranch and farm community can be very helpful. There are often properties which may be for sale that are not listed or being actively marketed. I also offer financing sources for folks who may not be able or want to write a check for the full amount at closing, but who may have the ability to secure financing for this type of property.

Sold! Steamboat’s Perry Ranch

A well-known Rocky Mountain landmark, Colorado’s 470-acre Perry Ranch, sold for $11 million ($23,000+ per acre). The sellers paid $13 million for the Routt County ranch in 2007 intending to improve it and then market it as a conservation development property, but last year’s recession squelched those plans. Hall & Hall’s Brian Smith in Steamboat Springs represented the seller. Tim Casey of Mountain Marketing Associates in Breckenridge represented the buyer. The transaction closed on June 30.

The original asking price of $25 million dropped to $19.5 million and then to $16 million last year when the economy tanked. “This sale is very indicative of what we’re now seeing: 15 to 25 percent off market highs,” says Smith, referring to the spread between the sellers’ purchase price in 2007 and the 2009 sale.

“Buyers who are not trying to pinpoint the bottom of the market can find all sorts of opportunities. A lot of sellers, particularly those with a higher basis in a property, are recognizing current market conditions and adjusting their asking price,” says Smith. “What made this property such an outstanding opportunity was the size of the parcel and its proximity to downtown Steamboat Springs. The south fence line is literally one mile to the city limits. One minute you’re tucked away by yourself in a lush little valley with aspen groves and Soda Creek. Hop in your truck and five minutes later you’re on Main Street. Best of both worlds. It’s extremely difficult to find that combination near a resort town, whether it’s Steamboat, Vail, Aspen, Telluride, Jackson, or Sun Valley.”

Sold! Montana’s Yellowstone Club Goes for $115 Million

CrossHarbor Capital Partners LLC paid $115 million to buy Montana’s Yellowstone Club out of bankruptcy court yesterday. The Boston-based private-equity firm agreed to pay $35 million in cash and assume $80 million in debt owed to Credit Suisse. CrossHarbor will also infuse up to $75 million in working capital.

CrossHarbor’s principal, Sam Byrne, is a Yellowstone Club member, and has been closely following its fortunes. In 2008, CrossHarbor attempted to acquire the club for $450 million.

According to the Bozeman Daily Chronicle, the sale capped a week of non-stop negotations in the court of federal bankruptcy Judge Ralph Kirscher. The only other bidder was Credit Suisse, which in 2005 loaned $375 million to Tim and Edra Blixseth, the now divorced couple who jointly founded the club.

As part of the final deal, Credit Suisse will be allowed to co-invest in the club with CrossHarbor. Credit Suisse also received additional assets, including Yellowstone Club real estate and a castle in France that the Blixseths had acquired. Unsecured creditors were recognized by the court as $19 million was set aside to pay local vendors, tradesmen, and others.

This marks the second major bankruptcy ruling in as many months involving Credit Suisse. In April the Promontory Club outside of Park City, Utah, sold to the Pivotal Group for $30 million. Credit Suisse had put together a $350 million loan package for Pivotal, which it used to develop the resort community before seeking bankruptcy protection.

According to the CrossHarbor website, the LLC “is an active investor in the distressed securities market. We invest in a wide variety of securities including real estate loans, corporate loans, and structured securities that are suffering from stress including monetary and/or technical defaults.”

Read more at:
“Cross Harbor Wins Yellowstone Auction,” Bozeman Daily Chronicle, May 18, 2009.

Texas Senate Tackles Eminent Domain

Four years after the Supreme Court handed down Kelo vs. New London, eminent domain reform continues. Earlier this month, the Texas Senate passed an amendment that would make it harder for the government to seize land from private landowners via eminent domain.

The foundation of Senate Bill 18 is the provision that private land can not be seized and then redistributed for private use. The bill also calls for good faith negotiations and fair compensation. The amendment passed the Senate on a 31-0 unanimous vote and is now before the House, which is considering a separate amendment. If approved by the House, it would go before Texas voters in November.

Also in the bill are several procedural definitions that call for transparency and accountability in the process.

The language is as follows:

• Spells out objective criteria for courts to follow to determine good faith negotiations. Requires condemning entities to follow those criteria, or risk paying attorney fees and court costs for the landowner.
• Creates a “Truth in Condemnation Procedures Act,” which requires a bona fide offer in writing.
• Requires any condemnation procedure to be done in public and by a record vote.
• Allows a property owner or their heirs to repurchase condemned property, at the original price paid for the property, if it is not utilized for public use after a 10-year period.
• Requires all condemning entities to register with the state Comptroller. This will give the state a handle on how many and the kinds of entities having eminent domain power.
• All of these provisions apply to all entities, not just governmental entities.

For Sale: 1.2 Acres for $12.5 Million

Every now and then, a listing comes along that is a flat-out jaw-dropper. Some, like the Bell Ranch at nearly 500 square miles, defy comprehension because of sheer size. At 186′ x 300′ this residential lot in the Dallas suburb of Highland Park takes the prize for price: $10+ million per acre.

Go ahead and take a closer look at 4500 Lakeside Drive. I walked it myself. Took about two minutes. Can’t make it to Dallas? Check out the website of the brokerage with the listing: Allie Beth Allman & Associates.

P.S. No ag exemption.

Sold! Utah’s Promontory Club

Yet another twist to a story we’ve been covering out of Park City, Utah.

Last year, the Pivotal Group, developers of the 7,200-acre Promontory Club, threw in the towel and sought bankruptcy protection. At stake was more than $350 million in loans packaged by Credit Suisse as well as a choice swath of 7,200 acres overlooking Utah’s Park City.

In bankruptcy court last month, the Promontory Club failed to sell. Guess who ended up with it? An affiliate of the Phoenix-based Pivotal Group. That’s right: the developer who defaulted on $350 million in loans purchased the property out of bankruptcy. The price? $30 million.

The 7,200-acre property features luxury second homes situated around Pete Dye and Jack Nicklaus golf courses and world-class skiing in nearby Park City.

Read more at:
“Bankrupt Luxury Community Sold to Same Developer,” Associated Press, April 17, 2009.

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