COLLIER COUNTY — Fiddler's Creek has a new life.
After the community's development company emerged from Chapter 11 bankruptcy last year, it opened the door for new builders to come in. Two builders — Lennar and D.R. Horton — are the first ones in the door. But other builders are looking to follow.
"We have a few other builders we're in talks with," said Aubrey Ferrao, CEO of Fiddler's Creek Community LLC, the new company that emerged from the court-approved reorganization plan.
A third builder is under contract to buy another 48 lots in the luxury resort-style community off Collier Boulevard, near Marco Island. When that deal closes at the end of the month, lot sales will have reached $50 million since the community's turnaround.
The development company won't build in the community any more.
"We are selling Fiddler's Creek and that's all we'll do," Ferrao said.
While it won't build homes, the developer will manage the community's golf course and club, its beach and boating club, its health club and spa, and other amenities including its restaurants. More than 300 lots in the community have been claimed by Miami-based Lennar Corp. and D.R. Horton Inc., headquartered in Fort Worth, Texas. On average, the smallest lots have sold for more than $100,000, with prices going up from there.
Hank Fishkind, a well-known Florida economist, said the restructuring "went about as good as one could have hoped."
"Companies are investing significantly in the project," he said.
He attributes the interest more to the project than to the improving real estate market.
The mood in the community is much more positive than it was a year ago when the future was uncertain, but there's "one eye cocked open," said Phil Brougham, a retiree who has lived in Fiddler's Creek since 1999. The general attitude of residents seems to be "let's wait and see how this all really turns out," he said.
Not everyone was happy about the way the bankruptcy played out. Some hoped for new management. Others didn't like the way they were treated in the reorganization plan.
Investors holding more than $100 million in so-called "dirt bonds," which helped finance some of the initial development in the community, were put last in line to get repaid and they complained. But many of those bonds have resold and the timing of repayment isn't as important to those new owners, said Andrew Sanford, a portfolio manager for ITG Holdings LLC in Naples and a holder of community bonds for District 2.
"Things are moving. They are selling out the inventory and it sounds like the good days are in store for the community, which is good for everyone," he said.
During the bankruptcy, some residents worried about the types of homes that would be built going forward, but the new builders are required to follow the original architectural standards, Brougham said.
"The main concern of people was 'are people going to build in here and build shacks?' And no, that's not going to be possible," he said.
Homes are much more affordable now. They are priced from about $400,000 to a little over $2 million. During the boom years of 2004 and 2005, prices ranged from $900,000 to more than $3 million.
"This was designed to be a Bentley and until 2008 happened it was racing along like it was a supercharged Bentley," Ferrao said. "A customer today can buy a Bentley for a Buick price."
In 2008, the financial crisis hit, which later led to the bankruptcy filing.
Home prices are lower, in part, because construction costs have fallen and there are different "refinements," Ferrao said. For example, kitchen and bathroom cabinets are no longer imported from Italy.
As the housing market continues to improve, Ferrao hopes the builders eventually will "get back to Bentley pricing."
Sharon Stein, a seasonal resident of Fiddler's Creek, said she's glad to see building start again and she's OK with the lower prices.
"I think when a home starts at half a million, to me that is not cheap," she said. "I paid a lot more for one, but the point is the real estate market turned around and the economy turned around. You've got to be realistic. You've got to start somewhere."
She's glad to see new homes selling again.
Since last month, D.R. Horton and Lennar have sold about 30 homes in the community, with a combined value of more than $13 million. From Feb. 1 to March 15, sales rose 94 percent from the same weeks last year.
"We're ramping up," Ferrao said. "We were hoping to do 20 sales. We did better."
Over time, Lennar will buy 227 lots in Fiddler's Creek in three neighborhoods. Its first model should be built in the next 30 days.
Lennar will bring new floor plans to the community that it hasn't offered anywhere else. The offerings will be varied, from luxury coach homes in Millbrook to larger estate homes in the more exclusive village known as Runaway Bay.
Most of Lennar's buyers are second-home buyers. Lennar invested in Fiddler's Creek because of its excellent location, reputation and amenities, said Matt Devereaux, Lennar's sales and marketing director for the Southwest division.
Originally, the developer was the only builder in Fiddler's Creek, a decision made to "control quality," Ferrao said. That worked well until the "fiscal crash" in 2008, he said.
"All of our lenders basically did not live up to what they said they would do," he said.The development company first ran into trouble after its long-term lender, Tomen Japan, faced financial difficulties in 2000.
"We were forced to file a lawsuit to enforce our joint venture agreement with them and achieved a favorable settlement with Tomen America in 2008," Ferrao said.
But when the replacement lender, a Fortune 500 company, reneged on a revolving line of credit, it spelled trouble at a time when no other financing was available.
The battle with lenders led to a bankruptcy filing.
"We didn't want to go into Chapter 11, believe you me," Ferrao said. "I had to. I had no other choice."
Ferrao invested $43 million of his own family's money to help the development company reorganize.
"The long and short of it is we outlived our lenders," he said.
The project had a market value of $978 million before it "got thrown a curve." In the throes of the financial crisis that value dropped by about 50 percent, Ferrao said.
All of the "undisputed" creditors have been paid off, or their loans are being paid currently, he said.
Launched in 1998, Fiddler's Creek has 1,748 completed homes. There are about 4,300 left to build. That leaves thousands of lots left to sell in the community, which Ferrao expects to sell out in 10 years.
"I see the green shoots of a real estate recovery all over Collier County," he said. "I see it happening in other parts of Florida and in other parts all over the country."
Still, he finds himself reassuring buyers, who heard about the bankruptcy and have reservations about buying in Fiddler's Creek.
"There's no need to be nervous," he said. "It's all new corporations and a lot of the debt has gone away."