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PALM COAST, FL – April 20, 2017 – DR Horton has purchased the residential development component and accompanying developer/declarant rights of Grand Reserve, a master-planned golf course-anchored residential community in Bunnell, Fla. near Palm Coast and Flagler Beach. The seller was Deer Run CDD Holdings, Inc. Grand Reserve has 157 platted buildable lots and room for about 600 more but only six completed homes. That’s about to change.
Like many developments that began during the tumultuous housing bubble, this community was not completed. Golf course construction was started in 1998 as “Oak Branch” but the course was never finished. The property was acquired by OB Investors LLC from W.R.J. Sales Inc in January 2006 for $6,000 000. The course was finished and renamed Grand Reserve. It opened January 5, 2008.
The Grand Reserve development’s infrastructure was financed by selling long-term municipal bonds, an option made available by the formation of a Community Development District (Deer Run CDD). To satisfy the debt burden to bondholders, a CDD assesses property owners annually.
The developer, OB Investors, also obtained mortgages totaling $17,700,000 from SunTrust at the time of purchase. The golf course did well under a management agreement with St. Augustine-based Capstone Golf, but only six homes were built on the 157 buildable lots.
In 2011, with a $14,594,441.50 remaining balance on the mortgages, SunTrust took title to the property through “Deeds in Lieu of Foreclosure.” SunTrust also obtained the developer/declarant rights for the community development. Subsequently, after the lender failed to pay the CDD obligations, the CDD sought to foreclose on the bank. The bondholders also sued.
In an April 2014 settlement agreement, the lender brought the bond payments current and retained title to the golf course, which SunTrust subsequently sold to Capstone Golf. The bondholders got the residential component plus the developer/declarant rights and promptly initiated efforts to sell the asset.
DR Horton closed on the purchase for $125,000 according to public records, a seemingly inconsequential number. But remember, the seller was a bondholder, not a real estate investor. Their primary concern was the resumption of bond payments and continuing payments of the bond obligations going forward. I assume that DR Horton, as the nation’s largest homebuilder (by volume), provided assurances to the bondholders that all future CDD payments would be met. The transaction closed April 6, 2017.
Of particular importance to our area, the assumption of the bond obligations assures that DR Horton will move quickly to plat the remaining residential lots and to sell out the entire development.
Grand Reserve has two entrances; one via U.S.1, the other from State Road 100 (Moody Blvd.) The existing homesites are located near the U.S.1 entrance, but DR Horton plans on SR100 being the primary entrance.
DR Horton has developed a stable of brands that target different market segments. For instance, their luxury Emerald Homes are found in the built-out community of Sunset Inlet on Route A1A in Beverly Beach. The DR Horton brand was selected for Country Club Harbor off Clubhouse Drive and Grand Landings, on Seminole Woods Blvd south of the airport.
There will be two brands available in Grand Reserve, the DR Horton brand and Express Homes, a more affordable home series focused on first-time buyers.
Grand Reserve will be a natural gas community featuring gas cooking and tankless hot water. Construction of two Grand Reserve models will begin soon; the DR Horton “Destin” model and the Express Homes “Aria” model. In the meantime, Grand Reserve sales will be directed from Grand Landings.
DESTIN - 2,363 square feet, 4 bedrooms, 3 baths, 3-car garage, priced from $247,990
DESTIN FLOOR PLAN
ARIA – 1,714 square feet, 3 bedrooms, 2 baths, 2-car garage, priced from$178,990
ARIA FLOOR PLAN
CLICK for the Grand Reserve site plan
GRAND RESERVE - Google Earth view
As you can see, I've been following this community with interest for years. Let me introduce you to Grand Reserve. Contact me at 386-931-7124 or email me at Toby@GoToby.com.