News for the Hospitality Executive
|By Peter Hull, The Island Packet, Hilton Head Island,
Knight Ridder/Tribune Business News
Mar. 17, 2006 - DAUFUSKIE ISLAND -- The owners of the Daufuskie Island Resort and Breathe Spa are seeking investors in preparation for new building plans at the resort and a separate tract.
Owners Bill and Gayle Dixon are preparing a master plan that could be presented to Beaufort County planners within three months.
If approved, the barrier island with no bridge could see development on a scale not seen in years.
Land planners working for the Dixons are preparing a concept for the 663-acre Melrose tract, home to the Daufuskie resort, and the undeveloped 190-acre Eigelberger tract.
Atlanta-based broker and investment banker Hodges Ward Elliott has prepared a prospectus for the Dixons' company, Daufuskie Island Properties, seeking joint venture partners. Bill Dixon said he owns the land, but is not a developer.
The Melrose Club has gone through several incarnations over the past two decades.
In 1997, the club was purchased from its members by Dallas-based ClubCorp, an international resort management firm. ClubCorp combined the Melrose and Bloody Point properties into the Daufuskie Island Club and Resort and restructured memberships.
But in 2002, with membership down to about 300, ClubCorp sold the resort for $23 million to the Dixons, who added the spa. The club has about 350 members.
At the end of last year, Dixon hired Atlanta-based West Paces, a hospitality management company formed by Horst Schulze, former president of The Ritz-Carlton Group, to run the property.
The Dixons envision a three- to five-year plan for the tract, with the Daufuskie resort forming the property's core and residential and vacation homes placed out from that center.
One of the key areas within Melrose is the resort's beach club, which sits at the eastern tip of Melrose and faces Harbour Town across Calibogue Sound.
The 3,495-square-foot club was developed in 1988 and includes a restaurant and bar, fitness center and two oceanfront swimming pools. Moving the beach club closer to the resort's 52-room inn would free up the land for potential development, the prospectus states.
"The opportunity exists to capitalize on the value of this site by developing and selling mid-rise condominium units or another high-end residential product," the prospectus states.
About 30 oceanfront condominiums or 10 single-family homes are envisioned on the site's six acres.
The prospectus estimates sales from the properties of $59.4 million, or an average of $750 per square foot, and development costs of $30.1 million.
Moving the beach club closer to the inn will take advantage of the under-utilized land around the property, the prospectus states.
The plan calls for expanding the inn to 175 rooms, with the addition of a pool and other beach club amenities.
"Renovating and expanding the inn would more fully utilize the resort's oceanfront real estate," the prospectus states, "while marketing the newly constructed and renovated rooms as condo-hotel units should provide immense developer profit." Redeveloping the inn and associated amenities should generate sales of about $87 million, or $850 per square foot, the prospectus states. Development costs are estimated at $34.6 million.
Some construction at Melrose already is under way.
Work began last fall on four two-story villas at the resort's Easter Beach Park scheduled for completion this spring. Each floor plan of 1,400 square feet consists of two bedrooms, two bathrooms, living space, kitchen and about 1,000 square feet of screened porch. Prices start at $739,000.
The company also has plans to build up to 15 three-story villas at Easter Beach -- a four-bedroom, four-bathroom townhouse on two floors and a two-bedroom, two-bathroom penthouse on the third floor. Each floor will have about 1,720 square feet with either a 600-square-foot screened porch or private roof terrace.
Located immediately west of the 322-acre Bloody Point tract, which the Dixons also own, is the undeveloped 190-acre Eigelberger tract.
Bloody Point is home to the Breathe Spa and an 18-hole championship golf course. The tract is zoned as planned unit development with 197 lots.
The Eigelberger tract is not zoned as a planned unit development, but the prospectus estimates an allowable density of 384 units. Fronting the Mungen River to the south, the land is zoned for 21 deep-water docks, according to the prospectus. Of those, three must be community docks and 18 can be private, the prospectus states.
"We estimated the potential value of the riverfront lots associated with these private deepwater docks to be upwards of $1.5 million each," the prospectus states.
Based on buildout of 46 riverfront, riverview, second- or third-row lots, net sales of $41.5 million are anticipated, according to the prospectus, and developer costs at $6.7 million.
Overall, the inn, beach club and Eigelberger developments could yield sales of $187.9 million, the prospectus states, with development costs estimated at $71.5 million.
But the question remains: If they build it, will they come?
Dixon's Daufuskie Island Properties is banking on more travelers from the Atlanta and Northeast markets and the continued growth of the real estate market.
However, development of the high-end residential Haig Point tract, which was expected to prompt wide-scale growth on the island when building began in the mid-1980s, struggled to deliver. More than 20 years later residential development is just coming to the island's 540-acre Oak Ridge tract, which is sandwiched between Melrose and Bloody Point. And long-standing plans for the 730-acre Webb tract, which includes what native islanders consider to be an all-important commercial element, has yet to materialize.
With no bridge to the island, getting to Daufuskie is considered either an adventure or a chore.
But for Dixon, the value of Daufuskie is clear before visitors even step off the boat.
"Those are three extremely important areas," he said, referring to Melrose, Bloody Point and the Eigelberger tract. "The pricing out there is a reality."
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Copyright (c) 2006, The Island Packet, Hilton Head Island, S.C.
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