The Power of Watermark

There is an undeniable surge of energy flowing through Bonita Springs-based Watermark Communities, Inc. In the year between last summer and this one, the company unrolled a veritable red carpet of new, prestigious undertakings: a Ritz-Carlton golf lodge in Naples, a Hyatt hotel in Bonita Springs, the acquisition of nearly 15,000 acres in the West Palm Beach area and the acquisition of the Jupiter Yacht Club.

Watermark has had a hand in the development of more than two dozen residential communities, serving a market of about 150,000 clients in central, southwest and southeast Florida.

But don't dare call WCI a developer. The company is also a builder, a realtor and an amenities manager, among other functions. "We strive to be a one-stop source for our customers, and the diversity if services differentiates us from other developers and homebuilders," says 65-year-old Al Hoffman, Jr. the company's CEO.

Revenues last year reached $550 million. This year, the number is expected to be $700 million. In years ahead, the company hopes to push ahead by another 20 percent per year.

"Our team is in place, and our goal is to be Florida's leading planned-community developer and homebuilder with the dynamic capability to integrate residential, resort and commercial projects," Hoffman says.

By all accounts, that's pretty ambitious. But then again, Hoffman and his team have never run short on ambition.

A Strong Willed History

A graduate of West Point and Harvard and a former military pilot captain, Hoffman first made his mark in development during the 1960s with Los Angeles-based Kaufman & Broad developers and homebuilders. In 1967, he formed his own residential development company, Tetkton Corp., which was partially acquired by paper and chemical company Union Camp Corp. in 1970.

After Union Camp liquidated its stake in the mid-1980s, Hoffman again took up development on his own, forming Florida Design Communities. He had a distinctive talent for spotting at-risk properties and turning them around into successful, full-amenity communities. For example, in 1987 FDC purchased the floundering Sun City Center near Tampa from First Chicago Bank. Today the 5500-acre community is doing very well, sporting a hotel, 126 holes of golf, 33 different living options and more than 200 activity/social clubs, all geared towards the retiree market.

By the mid-1990s, FDC had added properties throughout Florida, including Gulf Harbour Yacht & Country Club in Fort Myers, Burnt Store Marina in Port Charlotte, Walden Lake Polo and Country Club in Plant City and Keys Golf & Tennis Club in Homestead.

The Westinghouse Connection

As Hoffman built his own development niche, international giant Westinghouse was also dabbling in development through its Naples-based branch, Westinghouse Communities, Inc. (hence, the original WCI).

WCI began its endeavor in the early 1960s with a project in Coral Springs, followed by the upscale Pelican Bay in Naples. It also purchased large tracts of land throughout Lee and Collier Counties, as well as in Arizona and California.

Despite solid profits, however, parent Westinghouse decided to get out of the development business. In 1992, as part of a company-wide restructuring, WCI announced its intention to sell. Several companies made bids, but none were able to strike a deal.

In 1994, Hoffman arrived on the scene armed with a group of investors, including West Point friend Don Ackerman, a successful venture capitalist with J.H. Whitney & Co., and the non-profit MacArthur Foundation. To secure more than $300 million, the group received assistance from the Bank of Boston, the Bank of Hawaii and The Travellers insurance company (today part of Citicorp). After a remarkable one-day negotiation, the Hoffman group bought a majority stake of WCI valued at $500-$550 million.

Identity Change

This January, the two companies formally joined, making headquarters for the entire company in Bonita Springs. Along with the corporate change came a name change.

Hoffman explains, "We recently merged two companies -- WCI Communities and Florida Design Communities -- and decided to retain the acronym 'WCI' because of its 50-year tradition. But it didn't have a true meaning, so two of our employees suggested Watermark Communities, Inc. The rest is, as they say, our new history in the making."

Watermark President Jerry Starkey, a talented transfer from FDC, says he's very excited by the new look and feel of the company in Florida's highly competitive development scene. "It's an exciting company with a lot of diversity," he says.

Watermark's slogan is broadly stated as "Where Florida Lives" in a national marketing push. The choice of words also reflects Watermark's diversity -- while the company is known for communities such as Pelican Bay, where prices travel into the multiple million range, WCI also builds and manages projects such as Sun City Center, where homes start at around $80,000.

The slogan as well reflects the company's push to transcend the image of "residential developer" into the fields of real estate, home building, highrises, hotels and amenities. "Our business is that we want to provide lifestyles," says Mike Curtain, WCI's senior vice president of marketing, "When they (consumers) come to Florida to buy a home, they're really buying a lifestyle."

The company's ability to handle all parts of the residential buying process, Curtain explains, makes the overall experience "easier, more efficient and less traumatic" for those who want a piece of paradise but don't want to run around to half a dozen outside companies.

There is also clearly more profit -- and insulation -- in selling several different products. About 66 percent of the company's revenue currently flows from its residential building arm (including homes and both mid-rise and high-rise condominiums), 17 percent from land sales and another 12 percent from amenities.

The remaining 5 percent comes from real estate ventures at seven offices throughout Florida. Revenues in this area are expected to grow dramatically in the years ahead as a result of a new joint venture between WCI's realty arm and Prudential Florida Real Estate.

Milt Flinn, head of the new Prudential WCI Florida Real Estate, predicts a climb to more than 50 offices and 1,500 sales associates within the next five years. "When we do something," he says, "we tend to do it in a big way."

California-based Prudential brings to the table its bar-none brand imaging, nationwide networking abilities and sophisticated technological capabilities. "Their listing presentation is unbelievable," says Flinn.

WCI brings to the deal obvious opportunities for properties within its developments and a localized knowledge of the Florida market. There's also Watermark's long-established mortgage and title companies, and a property management arm -- again, the theme is in one stop shopping for t