WDW sells 100 acres to developers

[crazy4wdw]

The theme-park giant and huge landowner has sold off 100 acres recently and has a 30-acre parcel on the market.
Scott Powers | Sentinel Staff Writer
Posted March 28, 2006

Walt Disney World is selling off chunks of excess land on the fringes of its empire, allowing developers to pursue their own real-estate magic.

Disney recently sold 53 acres on Sherberth Road south of Disney's Animal Kingdom to a developer who wants to build hundreds of vacation town homes and condominium units, and another 47 acres on Reams Road, north of the Magic Kingdom, to a home builder.

Another 30 acres is for sale on U.S. Highway 192. And more may be put on the market as soon as the company re-evaluates its vast land holdings in Central Florida, particularly parcels on the far edges.

Disney spokeswoman Andrea Finger said the company is evaluating its Central Florida land holdings to see what fits into its long-term plans and what doesn't.

Disney owns 27,000 acres in southwest Orange and northwest Osceola counties, most of it purchased in the 1960s when Walt Disney stealthily assembled his holdings before the public learned of his plans to build Disney World. Much of the acreage makes up the area of and around Disney's theme parks, water parks, golf courses, shopping and hotel and time-share resorts between U.S. 192, State Road 429, Reams Road and Interstate 4.

The new deals may illustrate a shift in thinking for Disney.

Finger, spokeswoman for Walt Disney Imagineering, Disney's park planning division, said the 47-acre deal Disney made in December and the 53-acre deal in February are the first for the company in a while, other than land in the Little Lake Bryan and Celebration planned communities.

"With such significant land holdings in Central Florida, our strategy is to manage and develop land resources in ways that promote and enhance and complement our core businesses," Finger said.

Disney is not talking about the 30-acre tract, except to say it is in contract. Yet Disney asked its government agency, the Reedy Creek Improvement District, to de-annex the property, which is on U.S. 192, west of the Animal Kingdom Lodge.

The latest land deals are different from those at Celebration or Little Lake Bryan. Disney fully planned those two communities. The company transferred property in both areas to subsidiaries, which developed the communities and sold off the properties as they were developed. Those sales began in 1994 and still are continuing, Finger said.

The land in the latest deals would be governed by Orange or Osceola county planning and zoning codes, but would otherwise be outside Disney's master plans.

Susan Lawrence, president of Real Estate Strategies in Orlando, said Disney is finding a great time to sell. Prices are at an all-time high. Demand is high, and supply is tight, especially around Disney, she said.

"Like stock, when the prices are extraordinarily high, you're going to sell, especially if there's no long-term strategic use for it," Lawrence said. "That still leaves them with -- what? -- 26,000-plus acres?"

Such sales have been rare for Disney in recent years.

The most recent before December was in 2000, when Disney sold the 40-acre Crossroads at Lake Buena Vista, off State Road 535, for $15.8 million.

Other theme parks in town also have unloaded excess property in the past decade. In 2003, Universal Orlando sold 1,800 acres along Sand Lake Road after deciding it no longer wanted to build a third theme park there.

Since Anheuser-Busch bought SeaWorld in 1989, the company has sold off several hundred acres around Central Florida that were not contiguous to the park.

Last week Disney asked the Reedy Creek Board of Supervisors to begin steps to drop the 30-acre parcel from the agency's jurisdiction. Reedy Creek, a government agency set up by the Florida Legislature, provides utility, fire, emergency medical and other public services to Disney's property.

Normally, when Disney sells land that is governed by Reedy Creek the company asks the agency to de-annex the land so that any new landowners would not share the district's services and would not have any votes in Reedy Creek affairs.

Reedy Creek Executive Director C. Ray Maxwell said his agency is prepared to receive more de-annexation requests from Disney.

"They have gone around and looked at the entire property, the perimeter of the property, and said, OK, does this really fit into future development plans or not?" Maxwell said. "And if it doesn't, is there a market for it?"

Maitland-based Centex Homes bought the 47-acre Reams Road property for $4.8 million. Division President Pat Knight said Centex likes the property, but the company has not yet decided what to do with it.

Sherberth Development Partners, an investment group out of New York and Chicago, paid $15.4 million for the 53 acres. Orlando-based Resorts Development Group will develop the property. President Steve Parker said plans call for vacation homes, including short-term rental homes.

Parker said his company got an unexpected chance to buy the Disney property.

Resorts Development already was planning a 40-acre development next door when it learned that Disney would sell the 53-acre parcel. Knowing how rarely Disney has sold its Central Florida holdings, his investors immediately stepped up to buy it, he said.

"We like to think it was real-estate genius, but it was really dumb luck," he said. "They said, 'We just decided today to start selling some of it.' We said, 'OK, we'll buy it.' "

 

[wdwguide]

Interesting that they would get much demand for the Reams Road property, considering there is (to tbe best of my knowledge) no easy access to the parks from that area for non-cast in that area.

 

[DancingBear]

The article says the Reams Rd property was sold to a home developer, vs. the other property where it says vacation properties. There's a lot of homes being built all around that area.

 

[manning]

Looks like they need money.

 

[ztbz]

Interesting that they would get much demand for the Reams Road property, considering there is (to tbe best of my knowledge) no easy access to the parks from that area for non-cast in that area.

If one knows where they are going you can get very easy access to WDW at the Reams Road entrance as its no longer guarded by Security, in fact you could park for free at the Magic Kingdom by going in this entrance.

 

[Parkenthusiast]

Why would they do that??? I would keep the land... You mean with their creative minds they cannot use the land for something... Even if they use it as a green space sound barrier...... Nice move Igor... What next?? That is almost the size of the magic kindom.. I have a feeling Disney will be broken up and become quite small in the future.......

 

[wdwguide]

If one knows where they are going you can get very easy access to WDW at the Reams Road entrance as its no longer guarded by Security, in fact you could park for free at the Magic Kingdom by going in this entrance.

Seriously? I seem to remember there used to be a guard post at location #1 here, and just assumed there was another at location 2:

http://local.live.com/default.aspx?...rd Post_~aN.28.429662_-81.576678_Guard Post?_

If that area is "open access" now, I'll check it out during my next visit - I enjoyed the time I got lost on the way to the Magic Kingdom and ended up north of the park a few years ago.

PS: This is the best map of the RCID (as of 2005) I have been able to find, which may be useful for reference:

http://www.rcid.org/PDF/political jurisdiction map.base05_11.pdf

 

[Luv2Roam]

My first thought was selling that land had to do with the new exchange behind AK. That new entrance will alter any plans for what they would want to do with the land. And the money doesn't hurt either. That's just my perspective.
There is still plenty of WDW property.

 

[peter11435]

The land they sold north of MK was only 47 acres. Thats less than half the size of the MK. It was really nothing compared the rest of the property. Also if your interested that parcel of land was not part of Walts origianl purcahse. Disney purchased the land in June of 1991 from Thomas and Evelyn Paterson for $1,881,500. Now they sold it for almost 5 millions.

 

[crazy4wdw]

March 29, 2006 09:10 AM ET
Disney Listens to the Land
Motley Fool News

Is Disney (NYSE: DIS) the next real estate tycoon? The Orlando Sentinel is reporting that the family-entertainment giant has been selling off some of the land surrounding its Disney World complex in Florida in recent months. It sold off 53 acres just south of its Animal Kingdom theme park to a real estate developer set on building vacation homes and condos. It also sold a 47-acre tract just north of its flagship Magic Kingdom attraction to Centex Homes (NYSE: CTX).

This doesn't mean Disney will be hocking Dumbo next. It's just a the result of Disney realizing it really doesn't need 27,000 acres to complete its Florida resort. The fact that Disney wound up with more than 40 square miles of land, mostly on orange groves, was the handiwork of Walt Disney's vision in the 1960s. He quickly learned that Disneyland's biggest flaw in California was that the company didn't acquire enough land outside its original theme park. Competing hotels in park guests' sightlines were a distraction from Disney's themed efforts and an insult to its pocketbook that it couldn't play a bigger role in the area lodging industry that it created.

One may wonder why Disney just didn't develop the excess real estate itself. Disney is not hard up for money, and the Pixar (Nasdsaq: PIXR) acquisition will actually improve Disney's balance sheet, since it's an all-stock deal for a cash-rich animator.

Then again, Disney has been moving away from real estate. It has let real estate developers such as St. Joe (NYSE: JOE) take over the Celebration planned community that it built just south of Disney World.

Disney isn't the only amusement-park operator looking to cash in on unused turf. Six Flags (NYSE: PKS) is trying to unload some unnecessary parcels. One of the three recent additions to its board was Dwight Schar, chairman of real estate developer NVR .

I will always argue that having more land is better than regretting a land sale when it comes time to expand. I think companies like Disney and Six Flags would be better off developing the adjacent real estate so they can profit from it as a landlord. However, with real estate prices so high, it's awfully tempting to cash in on soil that Walter Elias Disney bought for pennies on the dollar.

So, yes, I get it. But when Disney or Six Flags start complaining of unruly neighbors or those unruly neighbors start protesting ambitious expansion, they will have only themselves and their nearsighted specs to blame.

 

[Parkenthusiast]

The land they sold north of MK was only 47 acres. Thats less than half the size of the MK. It was really nothing compared the rest of the property. Also if your interested that parcel of land was not part of Walts origianl purcahse. Disney purchased the land in June of 1991 from Thomas and Evelyn Paterson for $1,881,500. Now they sold it for almost 5 millions.

That was not the point I was making. I am sure that space could have been used possibly as a support area for park facilities. Employee parking, Employee kick back and relax area…. I am the type of person that does not like to get rid of things just for the sake of getting rid of things. I look at things and say how could I use that. Why would they have bought the land in 1991 to begin with??? They must have felt that a new attraction could been built or something…..

As far as actually useable land on the property people tend to forget that quite a bit of the land is designated as a nature preserve and cannot be touched so where is the “they have a lot of property left for development” coming from???? I see major restrictions… for major development plans for the property…

Lets not start making dumb moves you will regret later on… I have seen it happen too many times by people with the old palm of the hand hitting the forehead while saying I am such a dumb _____.

Igor does not impress me at all. I cannot get the image of him out of my mind when he introduced the 2005 WDW Christmas parade on TV. He walks on camera with his hand in his pocket with such a stupid look on his face like I cannot believe I am doing this.... Nice image you portrayed chief! Cast member training is in room.....

 

[tednvon]

Interesting...

We have driven by that field on Sherberth a hundred times and seen the cows and horses in the midst of all the Disney and hotel craziness...Not sure but we speculated it was Disney property...probably 2mil plus an acre for grazing land is pretty poor use of the property but it sure had a nice serene feel to it just before you entered Disney...
So another huge condo or hotel will go there....kind of a shame and good old Sherberth will become another 192 before long!!!

 

[Another Voice]

There has been a decision made at corporate which says Disney will no longer invest substantial capital at Walt Disney World. As far as they are concered, the resort is "complete" - meaning no more theme parks, no hotels, no shopping districts, no more water parks, etc. Disney beleives they have hit the limit of the number of people that want to go to WDW, and believe there is nothing more than can do to shorting the repeat visit period. While a third water park or another shopping are might be successful, Disney could obtain a better return investing elsewhere: foreign parks, cable channels, movie theaters, captial markets, etc.

Disney is, however, open to the idea of other people building on property. That's the whole point of closing down Pleasure Island; Disney is selling those locations to outside restaruants and retailers. Several years ago Disney and Lego were in discussions for a Legoland to be built on property. Disney would also be open to "outside hotels" and other attracations.

Selling the land is a quick and easy way of squeezing cash out of WDW. It's just a continuation of the strip mining that's been going on for two decades.

 

[peter11435]

I am sure that space could have been used possibly as a support area for park facilities. Employee parking, Employee kick back and relax area.

Disney already has many of all of those things. I have been to both of these pacels of land and can tell you they didn't loose anything.

And his name is Iger.

 

[ztbz]

Seriously? I seem to remember there used to be a guard post at location #1 here, and just assumed there was another at location 2:

A Note about Guard Posts, Guard Post #1 is still there but was moved back a hundred yards, This Gate is Called Park 2 and Guards the Entrance into the MK Tunnel area, you can now make a Left or Right turn at the 4-way stop sign but you can't go straight unless the Security Guard lets you through the Gate. Guard Post #2 was removed last year and is no longer use or standing.

Disney did away with the Security Guard at this gate (which was known as the North Service Gate) and also the gate at Fort Wilderness was also done away with as well. However Disney may decide to build an Automatic Gates similar to the ones use at each Disney Resort hotel.

Disney has four ways (or entrances) into the Magic Kingdom area, Most Guests only know of the Magic Kingdom Toll Plaza where you pay Disney 9 dollars to park, then there's the Fort Wilderness entrance, the North Service Entrance and the New Western Beltway Entrance which connects to a road called Bear Island Road, This road goes from a back entrance gate at Disney Animal Kingdom up to the Car Care Center which is at the back of the MK Parking Lot. This New Entrance has a Automatic Security Gates installed to prevent folks from traveling North to the Car Care Center.

The New Western Beltway access road will be opening for traffic on April 4th and connects the Hwy 429 Toll road to the Buena Vista Drive near Blizzard Beach and Coronado Springs resort.

 

[Maistre Gracey]

There has been a decision made at corporate which says Disney will no longer invest substantial capital at Walt Disney World. As far as they are concered, the resort is "complete" - meaning no more theme parks, no hotels, no shopping districts, no more water parks, etc. Disney beleives they have hit the limit of the number of people that want to go to WDW, and believe there is nothing more than can do to shorting the repeat visit period. While a third water park or another shopping are might be successful, Disney could obtain a better return investing elsewhere: foreign parks, cable channels, movie theaters, captial markets, etc.

Disney is, however, open to the idea of other people building on property. That's the whole point of closing down Pleasure Island; Disney is selling those locations to outside restaruants and retailers. Several years ago Disney and Lego were in discussions for a Legoland to be built on property. Disney would also be open to "outside hotels" and other attracations.

AV, while I don't doubt your knowledge here, your first paragraph contradicts your second.

If Disney can't bring in more guests with restaurants, parks, or whatever, why would they believe outside vendors can?
If Disney believes the number of guests will not grow with additional attractions, then one of two things must happen:
Either some guests will divert from Disney hotels and attractions, or the outside vendors will fail.

On a different note, is it really all about increasing the number of guests?
I mean, when a new park opens the price of admission is raised. Couldn't Disney increase revenue by opening another park without increasing attendance?

MG

 

[scanne]

There has been a decision made at corporate which says Disney will no longer invest substantial capital at Walt Disney World. As far as they are concered, the resort is "complete" - meaning no more theme parks, no hotels, no shopping districts, no more water parks, etc. Disney beleives they have hit the limit of the number of people that want to go to WDW, and believe there is nothing more than can do to shorting the repeat visit period. While a third water park or another shopping are might be successful, Disney could obtain a better return investing elsewhere: foreign parks, cable channels, movie theaters, captial markets, etc.

If this is "truth" then I am disappointed. I have no backing to what I'm going to say - it is just my opinion. But I think Disney would BENEFIT from another water park. And my family and I go EVERY year (sometimes more!) and try to extend our stays each year. This year is 8 days but next year we're hoping for 15 days.

All I'm saying is that I will repeatedly return to WDW - it is without a doubt my favorite place to vacation (and the only place I've vacationed in the last 8 years). I hope that the ideas expressed in the quote above change somewhere down the line. I'd love to see more hotels and a new water park - plus new attractions at the theme parks that already exist!

Just my .02!

 

[GrimGhost]

...And his name is Iger.

Thanks Peter, I was getting tired of that as well.

...
AV, while I don't doubt your knowledge here, your first paragraph contradicts your second..

I'd like to hear a response on this also.

 

[Another Voice]

There are two issues at play here – the attendance at WDW overall and the profitably of the guests already at WDW.

The belief is that WDW is a “mature market”, i.e. everyone who wants to WDW is already going. There are no large markets of people that haven’t heard about the place and there are no large markets that can’t get to WDW – two of the traditional places to “grow” a business. Instead Disney has focused on the third area, by getting the same people to buy more; in Disney’s case this means to shorten the period between visits and to extend their stays. In short, everyone that wants to spend their vacation at a bunch of theme parks is already going to WDW and going frequently.

Of course, this brings up the obvious direction – make WDW appealing to people that don’t want to see just theme parks. And Disney tried to address this question – it’s the reason behind The Disney Institute, the Cruise Line, Wide World of Sports and even to a degree Animal Kingdom. And now you can also see Disney’s problem, all but the boats have been business failures for the company.

Hence Disney’s decision against any major expansions. There aren’t anymore “theme park” people to attract (look at how everyone is ignoring Animal Kingdom), and the risk vs. rewards of changing the nature of WDW aren’t favorable (no one came to take a spa or a class with Roger Ebert). It’s simply better to take all that capital and spend on businesses with a higher return (like movies).


That being said, the company is still committed to 20% annual growth. If your overall attendance isn’t going up, that means you have to squeeze more money out of the people you have.

Disney believes it has a tremendously high cost structure. And, in fact, they do. But while the average line manager will complain about the costs of same-sex partner medical insurance, the real culprit is ABC, Fox Family, Feature Animation and all the other money-loosing areas of the company. In order to pay for all of this, the margins that the theme parks must operate under are extremely high.

The ultimate margin, of course, would be where you had revenue and no expenses. Disney thinks it has found that through “outsourcing operations”. Look at Tokyo Disneyland. The visited theme parks on Earth and Disney doesn’t spend a dime on them. BUT Disney gets a cut from every ticket, every box of popcorn, every plush Winnie the Pooh that’s sold. AND they also get a boatload of money just for using the name “Disney”. Pure, sweat, delicious profit flowing in an endless tide from across the Pacific.

So why not at WDW? Sell the restaurants and shed themselves of all the costs of actually running the places. Find someone who can run a restaurant better and more efficiently than Disney (not hard), and someone willing to accept 10% growth, and someone not saddled with twenty years of royalty payments for ‘The Power Rangers’. It’s very easy for Disney to structure the deal so they make more money by licensing a restaurant than by running one.

Plus it also solves the big, big, big problem that’s growing today. It used to be that people would wait (on average) roughly five years between visits. Overall that is down to about three years and there are large numbers of people who visit annually or even more frequently.

The number one thing they are demanding is “new stuff to do”. Opening a dozen new shops and new restaurants can get very expensive. But if have a dozen other people wanting to open one apiece – then it’s flat out cheap for Disney. Hence we got the Westside and the Boardwalk; brand new goodies for all the pin traders with the minimal possible investment from Disney.

In short, Disney thinks it can make better returns than investing in the theme parks. In fact, the parks themselves are nothing but cash farms, the harvest will be spent in other place. That’s driving all the decisions today and into the foreseeable future.

Couldn't Disney increase revenue by opening another park without increasing attendance?

On this point in particular, Disney has shown it can continue to raise prices without opening anything new, so why spend a billion dollars to do something you can do for free. Second, what really scared Disney was the attendance patterns for Animal Kingdom. The new park simply took people away from all the other parks. It didn't add new guests, and no one extended their vacation an extra day. So again, why spend a billion dollars to spread the same amount of between four parks instead of three?

 

[peter11435]

And Disney tried to address this question – it’s the reason behind The Disney Institute, the Cruise Line, Wide World of Sports and even to a degree Animal Kingdom. And now you can also see Disney’s problem, all but the boats have been business failures for the company.

We have done this before but this is the point you like to make that I strongly disagree with. I agree that the Disney Institute was a failure, but Animal Kingdom and the Wide World of Sports have not been total failures.

To say that people ignore AK is absurd. I can guarantee that this year AK will have the third highest attendance of any park in Orlando. It will be above MGM, Universal, and IOA. Sure the park has drawn many of its guests away from the other parks. But it HAS increased the length of stay for many Disney guests. AK's financial situation is only going to continue to improve.

As for the Wide World of Sports. The complex itself may not make a profit, but the impact it has on WDW is substation. The complex accomplished the same thing as the Food & Wine Festival, Flower and Garden Festival, WDW marathon and other such events. It brings large groups of people to WDW that otherwise would not be there during times of the year that the parks would otherwise be slow. You cant assess the success or failure of the complex without taking into account the money that is made off the thousands of event participants, families, and spectators that visit WDW, stay at the hotels, buy the food, purchase the merchandise, and buy tickets.