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Hoffmann Historic Deal

“M”assive Real Estate Deal In Naples, FL


BY TIM ATEN
OCTOBER 13, 2023 PHOTO CREDIT:TIM ATEN; ANNA NGUYEN

In a historic deal in Naples, Hoffmann Commercial Real Estate this week sold its significant downtown portfolio of properties to M Development, a high-end developer based in Aspen, Colorado. 

The massive sale of 27 properties includes 12 buildings on Fifth Avenue South, nine on Third Street South and six off U.S. 41 in Naples. The transaction is complete, but the title company is working through the mountain of paperwork today on the deal.  

“All the documents are signed and at the title company. The official closing should be this afternoon or Monday,” said Rob Carroll of Investment Properties Corp. of Naples, who is representing the buyer in the transaction. David Stevens and Tara Stokes of IPC represented Hoffmann in the deal. 

“The transaction is the largest in our history,” Stevens said. “It’s the biggest transaction that’s occurred in my career, and the biggest one that’s occurred on that street.” 

The sale price for the local portfolio is not being released by either party but the transaction is estimated by industry insiders to be between $250 million and $300 million, a record amount even by Naples’ standards. 

“It‘s monumental. It was a big number, but we’re not supposed to disclose that,” said Hoffmann Family of Companies founder David Hoffmann, noting that his firm is under a confidentiality agreement. 

The only Naples real estate transaction eclipsing the latest deal is the Watkins family sale of the iconic Naples Beach Club two years ago to the Athens Group for more than $362 million. The Hoffmann sale, notable because of its collection of multiple upscale properties, seems to even have surprised the family patriarch. 

“We’re like a lot of people and companies. I mean, you buy stuff, invest in it and, at some point, you do sell,” Hoffmann said. “I was personally planning on never selling it, but my sons had a different vision.” 

“Buying companies is a little different than buying real estate, and I think we’ve had a great deal of success in buying companies,” he said. “I know that the returns on the businesses that we buy are significantly greater than the real estate that we buy. So, I think that entered into it, too, and that’s their interest levels, buying businesses.” 

David and Jerri Hoffmann moved to Naples in 2015 and didn’t buy their first local property until then. The Hoffmanns’ sons, Geoff and Greg, are now co-chief executive officers of the Hoffmann Family of Companies, which has considerable holdings in Florida, Missouri, Colorado, Michigan and Illinois.  

“We are proud of the impact we’ve made on Fifth Avenue South, a world-class destination that rivals avenues and boulevards around the world,” Greg Hoffmann said Friday in a company release. “While the time has come to pass the ownership torch on some of our local real estate holdings, we are committed to growing our impact through further investment in Southwest Florida businesses and will continue to maintain the ‘Hoffmann Standard’ across all our holdings.” 

The Hoffmanns have a Chicago connection with M Development CEO Mark Hunt, who plans to issue a statement about the deal after it officially closes. In an unrelated proposal reported previously, M Development has plans to build Restoration Hardware and Whole Foods Market on property it purchased earlier on Fifth Avenue South in Naples. The company was introduced to Naples because of the Restoration Hardware venture.

This week’s real estate sale does not include any Hoffmann businesses or any of the businesses in the buildings that are part of the transaction. Hoffmann has leased back space in buildings where it operates businesses such as Hoffmann Executive Suites and Naples Transportation & Tours.  

One business tenant, Kravet fabric store, exercised its right of first refusal and purchased its Hoffmann property at 959 First Ave. S.  The Bleu Provence restaurant and Phil McCabe’s 5th on 5th building also were not part of the sale because, although Hoffmann announced that it was acquiring both properties in downtown Naples, the properties have yet to change hands. 

Perhaps the most recognizable Naples properties that are part of the sale include the two largest buildings at Four Corners at Fifth Avenue and U.S. 41, the Bank of America building on Fifth, the FortyOne Ten Design Park and buildings that host the popular local restaurants Sails, The French and The Bevy. The only property sold that is not within city limits is Coral Cay Adventure Golf on U.S. 41 in East Naples. 

Port-O-Call Marina in Naples and Hoffmann real estate holdings outside the city limits are not included in this week’s sale. Hoffmann retains ownership of real estate and properties such as Hertz Arena and Old Corkscrew Golf Club in Estero, Old Collier Golf Club in North Naples, Sunmaster and Tier Electric in East Naples, and American Farms and Topiary Creations in Golden Gate Estates. 

“We just bought a very large company not that long ago in Naples called Linstol, and we are going to continue to buy stuff in Florida and Southwest Florida,” David Hoffmann said. “So, we’re not going anywhere. It’s just a little change in focus as a company. My sons are more interested in buying businesses than they are real estate.” 

So, expect the Hoffmanns to use the capital from the recent real estate sale to expand the company’s business empire. 

“I think what we do more than anything is we buy companies, and I think the emphasis moving forward is on buying companies,” Hoffmann said. “So, I think there’s just been a shift. I think we’re going to reduce our real estate portfolio nationwide. This was an opportunity to do that. This group kind of approached us. We gave it some thought, my sons did, and I decided to sell it, and so it’s kind of their decision, but we still have a huge presence in Naples, both with real estate in Florida and businesses. I think we have 30 businesses, 2,000 employees in Naples.” 

The Hoffmanns still plan to retain the Port Royal home where they live seven or eight months of the year. On Forbes’ annual list of billionaires, Hoffmann said the Naples real estate sale did not come about because they needed capital funds for another facet of their business. 

“We’re extremely well capitalized,” Hoffmann said. “This sale, although monumental, it isn’t going to move our needle much. We have over $3 billion of assets. So, it was a good return on our investment. I’m not going to kid you about that. It was a monumental return, the biggest we’ve ever had in the history of the company, but I don’t think that was the driving force.” 

Hoffmann, 71, said it’s more about what his two sons, ages 42 and 35, want to do with the family of companies in the future. “Where do they see the opportunities? They see the opportunities of buying companies,” he said. “I think we’ve bought seven this year. That’s a lot.” 

The sculptures and other public art that Hoffmann displays in front of all of its buildings were not part of the real estate deal, but the streetside gallery could be available for purchase or lease, Hoffmann said. “I think everybody forgot about that. It was excluded,” he said. “We’ve got to talk to those guys to see what they want to do once it closes. I don’t think anybody’s had that conversation.” 

Architecturally, Hoffmann said each of the properties sold is significant in their own way and really interesting. He described to friends his conflicting feelings about the sale. 

“It’s a bittersweet deal,” he said. “It’s financially a great deal, but emotionally, I love the properties. I think they were well-maintained, and we had great tenants. We like to think we’re a big part of the positive change for Naples over the last few years.” 

Gulfshore Business will continue to follow this story and report on additional information as it is released.  

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