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Developer's recent hot streak carries over into IPO market

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By ROBERT TRIGAUX, Times Business Columnist

© St. Petersburg Times
published March 15, 2002


Florida luxury condo developer Al Hoffman's on quite a roll.

He was Jeb Bush's money man in the successful 1998 race to become Florida's governor.

He was such a big money raiser for George W. Bush's presidential race that he became co-chairman of the 2001 presidential inaugural committee as well as the Republican National Committee's national finance chairman. He recently stepped down from his RNC duties to retake the fundraising role for Jeb in his 2002 campaign.

Now, in a dry season for initial public offerings, he's just successfully taken his company public. On its first day of trading Tuesday, Hoffman's WCI Communities sold 6.9-million shares at $19 (raising $131-million), then watched as the new shares rose 20 percent that day before closing at $22.70. (WCI's stock closed Thursday at $22.86.)

In a state where rich Republican developers seem as plentiful as mosquitoes, why care about Hoffman?

Well, he's kind of a local boy, getting much of his business start in the bay area. His company's public offering is one of a recent few that's defied the long IPO drought, adding to the economic buzz that the short recession is ending.

And in the sizzling homebuilding industry, WCI is on a remarkable tear. In the super-hot southwest Florida market, WCI's stamping out startlingly expensive condo towers and "master" housing communities around Greg Norman-designed golf courses. These are luxury housing products -- some priced as high as $10-million -- that aging upscale baby boomers apparently can't purchase fast enough.

Financially -- and politically -- not a bad run, Al. Lately, there's more than the usual touch of Midas in Hoffman's fingertips.

For those not familiar with Hoffman, he was a private developer in the Tampa Bay area from 1975 to 1985. He developed the pricey Walden Lake development in Plant City, drove much of the growth of Sun City Center in Hillsborough County, and founded the Florida Design Communities firm in 1985.

His breakthrough came in 1995. In one of the biggest Florida real estate deals in recent history, Hoffman's Florida Design Communities bought Westinghouse Electric Corp.'s massive real estate division for $556-million. The deal formed the base for WCI Communities and gave Hoffman control of 11 residential developments with nearly 23,600 acres spread throughout Florida and two other states.

At the heart of WCI's success is its concentrated land holdings and snazzy condo projects in southwest Florida. Hoffman even relocated his corporate office from Sun City Center to Bonita Springs, strategically located between the boom towns of Fort Myers and Naples.

If you haven't driven from coastal Fort Myers south to Naples lately, be prepared for high-end development gone wild. Massive, seven-figure condo towers and gated upscale "master communities" are rising everywhere. It is here that Hoffman and WCI are the 800-pound gorillas of luxury building.

WCI has 34 communities under development throughout Florida, including projects in Naples, Fort Myers, Sarasota and Tampa on the west coast and Ft. Lauderdale, Miami and Palm Beach on the east coast. The company sells homes for as little as $100,000 and as much as $10-million, but mostly pushes homes with an average home price of $528,000.

Low interest rates are keeping the housing market strong. But consider this sign of wealth: half of WCI's buyers pay cash.

Some of the players behind WCI might surprise you.

While Hoffman pays homage to the Bush political family, one of WCI's biggest investors is the John D. and Catherine T. MacArthur Foundation. That's the same nonprofit foundation that funds public television and radio stations and offers grants to groups such as the Brookings Institution, Human Rights Watch, and the American Civil Liberties Union.

Hoffman says he's "thrilled" by the IPO success of WCI. He chose to go public now because WCI can get cheaper and more accessible funding by selling stock than by borrowing. And WCI wants lots of money in the coming years to leverage what Hoffman believes will be an accelerating high-end real estate boom in Florida fueled by boomers buying second homes and early retirement condos.

That's the same economic scenario other yuppie-market Florida developers, especially St. Joe Co. with its focus on expensive beachfront projects on its extensive Panhandle land holdings, think will keep them flush and getting richer for at least the next decade.

Short takes

IT'S NOT "WATCH-OVER-YA" BANK: So, a new logo was unveiled Thursday for Wachovia Bank, the surviving name of the merger of First Union Corp. and Wachovia Corp. The new logo was created with the help of the New York brand consulting giant, InterBrand. Another winner in the merger is advertising agency Mullen/LHC of Winston-Salem (home of the old Wachovia). This month, the ad firm beat out San Francisco's Publicis & Hal Riney, the former First Union ad agency, for the newly combined Wachovia's multimillion-dollar advertising business. Now everyone must practice saying the new name -- pronounced wah-KO-vee-a . . .

DOUGHNUTS RULE, STEAKS DROOL? Speaking of heavyweight brands, Krispy Kreme ranked No. 3 last year in the United States and Canada among the corporate brands that "make us stop and take notice," says brand consultant Interbrand. Only Target (No. 1) and Apple (No. 2) ranked higher in the U.S. market. If this sounds as flaky as the company's doughnuts, consider the potential clout of a strong brand. Krispy Kreme shares have risen more than sevenfold from the 2000 IPO price of $5.25. At more than $2-billion, its market capitalization is close to that of Outback Steakhouse Inc., Tampa's restaurant chain with more than 2,500 restaurants. Krispy Kreme has just 218 stores. And Outback has nearly six times the doughnut chain's revenue and earnings. . .

-- Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.

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