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730 Acres on South Padre Island Sold at Auction
2043 Views :: 27 Comments :: :: South Padre Island, Investment
730 acres of land on the north-end of South Padre Island was sold at a live auction on Tuesday, July 24th in Corpus Christi.

The development site, situated three miles north of the city of South Padre, encompasses the full half-mile width of the island and provides approximately 7,785 feet of beachfront footage along the Gulf of Mexico and the Laguna Madre Bay. South Padre Island is a 34-mile long barrier reef island at the southernmost tip of the Texas Gulf Coast.

The new owners will be able to establish all zoning and master planning, which could include uses such as mixed-use, high-rise condominiums, multifamily, single-family, entertainment, lodging, recreation, marina and retail pad sites.

There wasn't a problem with the land. The developer went bankrupt on a corporate level because of cash-flow difficulties. He simply didn't have enough cash with all the investments he had around the country.

UPDATE: We are not positive if the top bidders are from the Atlanta area or the Dubai group as previously reported. The 1st and 2nd place bids were very close. Depending on the ability of the top winning bidders to close funding, the final auction sales price will be between 38 and 81.5 Million dollars.
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By Stuart @ Thursday, July 26, 2007 7:17 AM
Land on the north-end of South Padre Island should continue to increase in value and in use on that news.

South Padre Island sales and traffic for June 2007 finally exceeded both 2005 and 2006. Looks like the tide has turned on the Texas Gulf Coast.

The word is out and consumer confidence is back. Our market is hot again!
By Rick @ Friday, July 27, 2007 10:15 AM
Has anybody heard who the group is or what types of projects they have done in the past? HFF did a great job of marketing the property globally.
ByMichael Stuart @ Friday, July 27, 2007 11:01 AM
We will release more information about who they are and what their plans are shortly.
Byrecenter.tamu.edu @ Saturday, July 28, 2007 9:46 PM
Texas rural land prices increased 23 percent in 2006. The current statewide price is $1,825 per acre. Volume of sales remained strong with 8,202 sales in 2006. Markets in 2007 remain robust.

Buyers clamoring for larger holdings no longer choose among properties sellers have placed on the market. Instead, a buyer's representative now frequently locates a property matching a seller's specified search criteria and approaches the owner, making repeated offers until he or she decides to sell. The prevalence of these bidding transactions may be partially responsible for the sizable increases in market prices.

Specifically, these buyer-initiated transactions normally focus on highly desirable properties. Therefore, they could alter the market's composition by including a higher percentage of superior-quality properties than in the normal historical setting in which buyers choose from listed properties. If current sales consist heavily of the highest quality land, the measured appreciation rate may be higher than the actual appreciation rate for the state as a whole.

As Texas evolved from an agricultural to an urban-based society, nonfarm buyers flocked to the countryside, buying acreage for recreation and investment. In the past decade, these buyers have come to dominate market activity.
By Stuart @ Saturday, July 28, 2007 11:43 PM
Senate OKs $3 billion to control Mexico border.

BREAKDOWN ON WHERE MONEY WOULD GO

The money would let the Department of Homeland Security:
• Increase the Border Patrol to 23,000 agents by 2012
• Construct 700 miles of fencing at the U.S.-Mexico border and 300 miles of vehicle barriers.
• Permit the purchase of four unmanned aerial vehicles to scan for illegal crossers, and add 105 ground-based radar and camera towers integral to the operation of a "virtual" fence.
• Nearly double the detention space for apprehended illegal immigrants to 45,000 beds.
• Add 6,000 Immigration and Customs Enforcement agents, 2,500 more Customs and Border Protection officers and 1,000 investigators to combat alien smuggling.

This news can only add to the future property and land values for the South Padre Island and Rio Grande valley area.
By Rick @ Sunday, July 29, 2007 5:27 PM
Why has there been no mention of this in the news? It seems like a significant enough deal. Nothing in the local paper of The Caller.
By Stuart @ Tuesday, July 31, 2007 8:33 AM
The buyers have 30 days to fund and close on the transaction. You should see it in the mainstream news shortly after that.
ByGlobeSt.com @ Wednesday, August 01, 2007 2:44 PM
The $81.5-million winning bid at a bankruptcy court auction for a 730-acre parcel at the north end of South Padre Island was placed by an agent acting for a Florida real estate company, GlobeSt.com has learned.

But, the ultimate buyer may be a large Middle Eastern investment group.

The land was auctioned July 24 in US Bankruptcy Court's Southern District of Texas in Corpus Christi in proceedings overseen by Judge Richard Schmidt. The seller, Zohouri Group South Padre LP, was represented by Jeffrey A. Holliden and Robert Williamson, managing directors in the Houston office of Holliday Fenoglio Fowler LP, and associate director Barbara Guffey. The minimum bid was $38 million.

Corpus Christi attorney Michael B. Schmidt, who served as Chapter 7 bankruptcy trustee for the seller, confirms the winning bid amount, but says the sale cannot be officially announced until the presumptive buyer returns a signed contract to the court. The contract had not been returned as yesterday.

Minutes of the proceedings show six bidders, with the winning bid placed by David Farshy. He could not be reached for comment.
Mitchell Ayer, an attorney with Thompson & Knight LLP in Houston who attended the auction on behalf of the holder of a second lien on the property, tells GlobeSt.com that Farshy was acting for Lancore Realty Inc. of Boca Raton, FL. According to Ayer, the final price will pay off the entire $38 million of secured debt owed by the seller as well as unsecured claims, leaving a "substantial distribution to equity."

Calls to Lancore principal Merv MacDonald were not returned by deadline. However, Lancore's website describes the company as a "multi-faceted real estate brokerage and consulting firm" and gives no indication of direct investment activity. A blog maintained by a real estate company on South Padre claims the purchaser is in fact a group from Dubai. Calls to the blog writer for confirmation also were not returned.

Speculation has centered on Island Capital Group LLC, a New York City-based company "dedicated to the development and operation of mega-yacht marinas," which bills itself as "the only financial advisor dedicated to real estate securitization in the Middle East." Island Capital serves as the exclusive financial advisor to Emirates National Securitization Corp. [ENSeC], the United Arab Emirates functional equivalent of Fannie Mae.

The property, which includes 538 developable acres, was put out to bid after the owner, an investment group formed by Atlanta-based developer Fred Zohouri in conjunction with Houston real estate executive Jose Lora, defaulted on its acquisition loan. Zohouri and Lora bought the land in May 2006. The developers planned to build high-end residential and mixed-use projects on the site as well as on other sites in Texas and Florida. They filed for bankruptcy protection in late 2006.

The land has about 7,785 feet of beachfront along the Gulf of Mexico and Laguna Madre Bay. It encompasses the entire width of the island. The site's buyer will have the ability to establish zoning and master planning upon acquisition.
By Rick @ Friday, August 03, 2007 8:35 PM
Gold turning to dust. . .or back to just sand.
By Alice Donahue @ Friday, August 03, 2007 8:51 PM
If anyone knows about turning sand into gold it's these guys - and also the Cameron Appraisal District - now fully aware of land value on the north-end will be handing out some nice christmas gifts next year.
By Stuart @ Friday, August 03, 2007 9:03 PM
Looks like we have a new contender for the title

Top 10 Lists by Taxable Value

Top 10 Taxpayers in Cameron County
AEP TEXAS CENTRAL CO $104,875,630
SOUTHWESTERN BELL TELE $72,344,960
DELPHI ELECTRONIC & SAFETY $50,430,415
TRICO PRODUCTS CORP $39,556,907
CBL/SUNRISE COMMONS LP $38,706,222
PANASONIC AUTOMOTIVE ELECTRONICS $36,105,821
H E BUTT GROCERY CO $35,442,867
COLUMBIA VALLEY HEALTHCARE SYS LP $35,014,370
WAL-MART STORES INC $34,532,873
HARLINGEN MEDICAL CENTER LIMITED $25,458,318

Top 10 Taxpayers in South Padre Island
PLAYA BONITA PROPERTIES LTD $9,335,026
LAGUNA BAY TRUST $8,087,723
SSPIBR LTD $7,836,061
ICS MANAGEMENT COMPANY $7,457,511
AEP TEXAS CENTRAL CO $6,752,110
SAIDA ROYALE CORPORATION $6,531,728
AEP TEXAS CENTRAL CO $6,384,998
SPI LA COPA LTD $6,383,709
ALMA INVESTMENTS INC $6,305,053
SPI OLEANDER LTD $6,146,928
By Rick @ Friday, August 03, 2007 10:29 PM
Are they basing the tax values on phantom buyers who do not exist?
By Stuart @ Saturday, August 04, 2007 11:38 AM
When something as big as 700 acres sell for 81.5 Million dollars it opens up a lot of potential and speculation about what that means for the future of the South Padre Island area and the north-end of the Island.

It's good news.
By Rick @ Saturday, August 04, 2007 3:27 PM
Fair enough. Just doing my due diligence. I look forward to future developments. Pun intended.
By Ben @ Tuesday, August 07, 2007 9:48 AM
Does anyone know if Zol buyer has returned executed contract back to Michael Schmidt? I wonder why Vencenza site has not sold yet?
By Rick @ Thursday, August 09, 2007 11:58 AM
The silence is disturbing.
By Roland @ Sunday, August 12, 2007 2:49 PM
www.Globest.com has some info on who may bought the 700 acres. They mention Dubai and the UAE as possible new owners. This is INTERESTING if true.
By Stuart @ Wednesday, August 15, 2007 10:42 AM
In real estate auctions such as this with a large amount of money at stake, there are the bids and then there is the actual process where the top bidders have to fund. In some cases the winner bid cannot fund, in which case in goes to next highest bidder, etc.

Since there was already a buyer established before the auction even started at $38M, we can assume that it will at least actually close for that amount - even if all the other higher bidders are unable to close.
By Rick @ Monday, August 20, 2007 4:34 PM
Final price was 40.5M. From a group in Houston. Dubai offer was bunk. Details forthcoming.
By Walter Drumonr @ Tuesday, August 28, 2007 8:54 AM
The top 3 bidders (including the Dubai "Group") were all Zohouri Sock Puppets/Straw Buyers and wanted to tie up the land for 90 days for $10,000- just a joke
ByMalok @ Thursday, August 30, 2007 10:54 PM
Bummer about the Dubai offer. Now you are at about half of where you thought you were. :(
By BN @ Friday, September 21, 2007 8:13 AM
Whats the latest on the buyer for the 700 acre?
By LB @ Friday, September 21, 2007 8:18 AM
I heard that this property still had not closed...Did it actually close for $40 million and if so does anyone know who the buyer is?
By Ken T. @ Tuesday, December 18, 2007 10:46 AM
Ditto? Any up to date info?
By Kenya Romero @ Tuesday, December 18, 2007 4:05 PM
For those of you interested in information about this property, we called the office of Holliday Fenoglio Fowler, LP which represents the seller of the property and they told us that the latest news.

There's a buyer for the property and it's under contract.

It has not closed as of yet. We still do not know who the buyer is or how much it was sold for.
By Doug Anderson @ Tuesday, March 18, 2008 7:55 PM
What is the latest on this parcel? Did the buyers ever close on it??? Any updates?
By Javier Bardem @ Saturday, March 29, 2008 4:40 PM
selling to the high bidder in a joint venture with the Dubai investment fund money from initial higher bidder still in the deali
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