MELODY KEY -- During a tour of a private island retreat in the Keys — that was just featured on WealthTV and is about to be auctioned online with a starting bid of $3.5 million — a man wearing a pink shirt, board shorts and purple Crocs tried to pass himself off as “just a renter.”
But the guest actually was the island’s owner, Jason Kennedy, the British CEO of the Kennedy Group, a London-based recruiting company for executives of financial institutions.
In March 2011, Kennedy bought the island with an octagonal wood house from rock star Nick Hexum of the alternative band 311. Hexum tried to sell his island for $10 million during the height of the real estate craze in the Keys in the mid 2000s. By 2011 he was desperate to sell. Kennedy agreed to pay $2.3 million for the unique property, despite having not seen it in person until the closing.
Two months after the purchase, a tweet from @melodykeyisland read: “just bought Melody Key Island in the Florida Keys, any thoughts what we should do with this island?”
As it has turned out: renovate and try to sell. Hexum’s rustic outpost with a Robinson Crusoe jungle feel was transformed into a contemporary vacation home with manicured resort landscaping that includes artificial grass and a heated pool. Upgrades also were made to the solar power system, and a new desalinization unit was installed that can purify 800 gallons of water per day if the 12,000-gallon cistern were to run dry.
With the completion of the renovation, which Kennedy valued at $2.5 million, Melody Key was put back on the market only 16 months after it was purchased. List price: $9,995,000. “He wanted to try it at that high price, but it wasn’t my recommendation,” said Bill Hart of Ocean Sotheby’s International Realty.
Nine months later, and with little interest, the price was dropped by $4 million. The lower price generated no offers. Kennedy changed listing agents, but after three months he grew impatient and decided to gamble with the online auction.
It begins at 10 a.m. ET Monday and ends 2 p.m. ET Thursday. To be able to bid, a person must wire $350,000 into an escrow account.
“I will be curious to see what happens with Melody Key,” said Chris Krolow, CEO of Toronto-based Private Islands Inc. “Auctions generally don’t work for private islands that are on the international market. My guess is it won’t sell.”
Lamar Fisher, CEO of Pompano Beach-based Fisher Auction Co., which is handling the online auction, said he thinks Melody Key will sell. “But at what price is the $64 million question I never can answer,” he said.
Fisher’s auctions have led to sales of two islands near Fort Myers, one in St. Johns County, one in the Bahamas and most recently, Crow’s Nest Island in Homosassa. It had an opening bid of $90,000 and went for $575,000.
Fisher, who has been in business for 40 years and recently held the auction that led to the sale of the Versace mansion on South Beach for $41.5 million, said he recommends that sellers start their opening bids at 50 to 60 percent of the last asking price: “We figure that intrigues the buyers enough to get engaged and do their due diligence. Everyone likes a deal, I don’t care how wealthy you are.”
“And,” Fisher added, “once the active bidding begins, competitive nature takes over and the sky’s the limit.”
There are about 1,700 offshore islands in the Keys, but only 34 of them have houses on them; about 10 of those developed islands are for sale. Some have been on the market for years.
“In the beautiful Florida Keys you have a handful of gorgeous private islands, but they are more eye candy and a dream and do not always work for everybody,” said Krolow, whose company lists about 550 private islands for sale worldwide.
Hart said during his 30 years as a Realtor in the Keys, “I’ve sold a lot of island homes but never sold an island. It takes a special breed, not to be connected to the road.”
The big problem for the Keys, Krolow says, is shallow waters. Wealthy people who buy islands usually also have yachts. Melody Key caretaker Capt. Mike Henry said a person could walk the half-mile or so to the island from the canalside dock on Summerland Key that comes with the property. “It’s only about three to four feet deep depending on the tides,” he said.
At $20 million, Broad Key, near swank Ocean Reef in Key Largo, is the most expensive private island on the market in the Keys. It’s 63 acres with a complex that includes a five-bedroom custom estate home and surrounding guest cottages.
Rumors swirled two years ago that rapper Jay-Z had paid $20 million to buy Hopkins Island, a 12.5-acre island retreat 2.5 miles off the shore of Big Pine Key, as a gift for his wife, Beyonce Knowles. But that proved untrue, and Hopkins Island, where President Harry S Truman once vacationed, is still for sale at $17 million.
A few months ago, one of the crown jewels of the Keys went on sale: Ballast Key, the only private island in the Key West National Wildlife Refuge. Entrepreneur David Wolkowsky, known as Mr. Key West, is asking $15.8 million for his property, which he bought in the 1970s from the Navy. He has hosted a slew of prominent guests there, including Truman Capote, Leonard Bernstein, Gloria Estefan, the Bee Gees, Tennessee Williams, Prince Michael of Greece and British Prime Minister Edward Heath.
Ballast Key also was featured in the 1989 James Bond movie License to Kill, in which 007 seeks refuge on the island and calls Wolkowsky at his home in Key West to say: “David, its James, James Bond. I’ve broken into your home. I hope you don’t mind.”
Melody Key has been featured on HGTV’s Extreme Homes and on the Travel Channel, when Hexum personally showed the host around his relaxing retreat where surrounding mangroves provided so much privacy he said you could run around naked.
“I hadn’t planned on buying an island,” Hexum said. “I just came down here on a vacation, just fell in love with the place, and by the time I left I had made a deal to buy it.”
Chris and Thomas Lesick, who bought the then-pristine island for $125,000 in 1978, sold it to Hexum for $2.55 million in 2003. Since then, no private island in the Keys had sold for more than that.
Melody Key also will be shown in an upcoming episode of HGTV’s series Island Hunters, hosted by Krolow. In the new series, a buyer looks at three islands and purchases one of them. The other choices were Fanny Key and East Sister Rock, both off the shore of Marathon.
The California buyer chose 1.7-acre Fanny Key for $6 million. “But the deal fell through when the guy couldn’t come pu with the money,” said Fanny Key owner Thomas Palumbo, founder and CEO of Satellite Beach-based Islands International Realty. His real estate development company had bought the island for $500,000 from a lobster fisherman in 1987. It came with the shell of a house that he turned into a five-bedroom, three-bath home with a pool and roof deck that has 360-degree views of the Gulf of Mexico. He’s now dropped the price to $4.9 million.
For the episode, East Sister Rock owner Bob Williford lowered his asking price from $12 million to $10 million for his island, which once hosted actress Delta Burke.
In a pilot show for Island Hunters, a Wisconsin couple looked at three of the Keys smallest private islands and chose Charlie’s Island, which had no house but instead had a 38-foot Holiday mansion seaworthy houseboat that sleeps four to five people.
Krolow said one of the show’s other choices, Pretty Joe Rock, would make someone a good investment, even at the $1.5 million asking price. It’s tiny, at just .25 acres, but it has a quaint house that generates about $150,000 in annual rental income.
Melody Key is a popular rental, with an average weekly rate of $9,000, according to Fisher advertising material.
Realtor Rick Lively of Coldwell Bankers International was the last listing agent for the island and said renters hampered his efforts to try to sell it.
“I had four separate inquiries who wanted a showing,” Lively said. “But the owner of Melody Key had a high-profile guest from Matchbox 20 and other people who he did not want to disturb. We couldn’t schedule the showings around his guests.”
Henry, the caretaker, showed off a lot of the work he has done on the property since Kennedy bought the place. It included putting in the pool, which he transported to the island by floating it like a boat. “We had a party in it on the way over,” he said.
In 2013, a group of 13 Cuban migrants landed there. Henry put them to work stacking lumber before the Coast Guard arrived. An osprey couple now make the island its winter home, thanks to a wooden structure Henry found floating after Hurricane Wilma and mounted high up a tree. The birds seem to love the 360 views as much as the guests of the three-bedroom home with a widow’s walk and plenty of balconies.
While the property is listed at six acres, four of those acres are submerged and another 1.42 acres are environmentally sensitive.
Last year, Monroe County appraised the just market value of the island at $1.28 million. This year, it jumped to $2.26 million.
“But private islands are unique properties that intrigue individuals,” Fisher said. “Some people want something special in life and buy a Jaguar; others may want a private island.”
Fisher expects most of the bids will be made on the final day of the auction. If a bid is made within the last five minutes, the ending time is extended by five minutes. It continues until there are no more bids.
While Kennedy wanted to remain anonymous regarding Melody Key, he appeared on Bloomberg TV last year to talk about the career fate of a Goldman Sachs employee who aired the company’s dirty laundry in a New York Times op-ed piece.
Kennedy said the employee’s best bet for future income: “probably buying a private island and writing your memoirs.”