“There’s not too many of those big deals left in the Keys,” Schmitt said. “Knight’s Key probably is one of the last ones.”
In 2007, Earthmark had big plans to turn Knight’s Key RV Resort and Marina, 24 acres of prime land near the start of the historic Seven Mile Bridge, into a 199-room hotel/condo called Maranu Luxe Bungalow Resort and Spa. Organizers of the Seven Mile Bridge Run feared they would have to end the popular event because they would no longer be able to stage it from the RV resort. Six years later, it’s still an RV Resort.
Marathon planning director George Garrett said in 2009 it likely would take years to sort out the developer’s legal tangle that involved an estimated 15 banks.
And he was right. After contentious litigation, the Knight’s Key foreclosure case finally was completed, with CXA-10 Corp., of Plano, Texas, receiving title for $100. The judgment was appealed and on March 25, the 3rd District Court of Appeal upheld the judge’s decision.
Schmitt expects the property will go on the market soon after the clear title was delivered — and it will generate a lot of interest.
Garrett agreed: “Half a dozen people at various times have sat in my office and talked about development potential of Knight’s Key, indicating they are hot to go.”
Also in Marathon, the Coral Gables-based Peebles Corp. bought the aging Key Colony Bay Hotel (formerly a Ramada Inn) on five acres for $28.3 million, and borrowed about $50 million to develop it into 72 ultra luxury waterfront homes with roof terraces and elevators.
The 80-room hotel still is shuttered as the foreclosure case continues.
“About a year and a half ago the bank and Peebles came down to the Keys to meet with me and we went on site,” Garrett said. “I’ve heard nothing on it since and they haven’t done anything. They are still in an arm-wrestling contest.”
That case will go before a judge for trial, although the date has not been set.
While many bargain hunters looking to invest in large Keys properties have had to wait for the outcomes of these complicated foreclosures and lawsuits, many also have been waiting for the recession to run its course.
“The market has turned enough now that you can figure out what to do with a piece of property to make some money,” Schmitt said. “Before, they [condos and townhouses] were selling at such low numbers, even below construction costs, that it didn’t make any sense to buy a big property to redevelop it and try to sell it off.”
But real estate in the Keys has bottomed out and steadily has been on the upswing. Last year, the island chain closed with an 8 percent increase in number of sales, 12 percent increase in pending sales and 7 percent decline in inventory.
The average sales price improved 5 percent to $422,000. While it’s still nowhere close to the 2006 peak when the figure was a whopping $805,000, the average sales price is expected to continue to trend upward. One reason: Distressed properties account for less than 10 percent of all properties on the market, the first time that has occurred since 2007.
Another reason investors see the Keys as a good buy now is the strong tourism market.
Despite the recession, the threat from the BP oil spill and the real estate crash, the Keys have enjoyed occupancy rates and average daily rates for hotel rooms that are the envy of most tourist destinations.