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♪ [Theme Music] ♪
MICHAEL STOLER: It's 90 miles away.
That's what I care.
It's two and a half hours.
It's a schlep.
I don't care what people say.
But people love the East End of Long Island.
And there's a lot of commercial development and
business taking place in the East End of Long Island.
So today I've assembled four individuals who are
actively involved in the financing and the
development of what's happening in the
East End of Long Island.
My guests today include Don Eversoll who is the
Principal at Timber Ridge, Kevin Santacroce who is
the Executive Vice President and
Chief Lending Officer of Bridgehampton National Bank,
Steven Dubb who's the Vice President at the
Beechwood Organization and last but not least another
banker, Bob Bernard who is the Senior Vice President
of Capital One Bank.
So since you and I are the kids over here, I'll ask
you the question first.
What have you seen change over the last 20 years in
the East End of Long Island because you've done
a lot of building in the market.
Has it got easier or is the zonings kept it harder or...?
DON EVERSOLL: Michael, nothing has been easy --
nothing is easier.
I mean there are challenges.
Obviously what we try to do is bring value for the
consumer, otherwise they won't buy and it's trying
to find the niche markets that we look to and are
the product we're building now is a for sale,
non age restricted.
MICHAEL STOLER: But that's an interesting discussion.
I mean your family has built a number of age
restricted and you've built a number of age
restricted and one of the projects that you had done
prior to this one was in West Hampton and age restricted.
For my audience, why are age restricted, and I'd
like this also from the banker portion, why are
age restricted emphasized by the community?
DON EVERSOLL: Schools.
STEVEN DUBB: So the school districts don't want an
increase in the number of school children in their
district due to developments. So they generally support
age restricted communities that won't --
MICHAEL STOLER: But if we're talking
about a development of maybe 80 homes.
STEVEN DUBB: There's a study that came out a few
years ago. It was done on Long Island.
And typically these communities, not age
restricted, don't produce that many school children.
I forget exactly what the numbers were but one per
16 houses maybe and so they really don't have
much of an effect.
In fact, the tax revenue almost always exceeds the
cost of the additional children.
But I don't think the school districts really
take that to heart.
So that's a position that they take.
KEVIN SANTACROCE: There's a demographic element to
that too. I think the age on the East End of Long Island I
think the demographics are -- It's very challenging
for young people or people with families to live and
afford to live out there.
So I don't think -- I think that's comes into
play to a degree as well.
MICHAEL STOLER: But aren't we also when we're talking
about the East End, Manorville, East Port,
that's not truly East End going that far but that is
the East End of Long Island.
Do you see potential development in the
Manorville and the East Port sections and the
Santa Moriches or...?
KEVIN SANTACROCE: I think if you look at the census
numbers, Manorville has one of the highest
percentage increases from 2000 -- from 1990 to 2000
in terms of -- and then in 2010 as well.
So I do think it's an area that has seen some development.
STEVEN DUBB: There is certainly a lot of land
there but it comes down to zoning and the density
that can be put on that property.
But we built, it had to be 10 years ago now, a 400
units right off of Route 111 which is what you take
to get from the LIE down to 27. So we were there in
the beginning. It was one of the first --
MICHAEL STOLER: Now were these for
age restricted or regular?
STEVEN DUBB: That was non age restricted.
MICHAEL STOLER: Were these for homes for full time or
because a lot of homes like the ones that you're
building in West and the ones that you're building
in South today you'll have a portion who will be full
time but I would probably venture to say that more
than 50 percent will be part time.
DON EVERSOLL: Their second home.
It's a second home market.
MICHAEL STOLER: How do you see the retail business
doing out there as a banker and so on?
ROBERT BERNARD: It certainly does well enough.
You know the larger pieces of commercial real estate
are centered in South Hampton and out in East Hampton
and we've had some opportunities to do some
financing in those areas.
But it's -- we're just trying to focus on the
larger transactions, things over 10 million,
so there's really not quite a lot going on.
I don't know what you guys think of the South Fork
but there seems to be activity that's obviously it's certainly
there in the summer months but it seems to be more vibrant
the other months of the year too. So it can support
the retail and some secondary office buildings.
DON EVERSOLL: I don't think there's
any question as to that.
I think a number of people are coming out over the
weekends, certainly during the shoulder seasons, the
fall and the spring, and some even as well the winter.
But it's a wonderful place.
I mean the fall and on the South Fork is really an
extended summer and it's become very attractive for
people particularly with telecommuting and...
MICHAEL STOLER: Now what do you consider the South Fork?
What towns are the South Fork?
DON EVERSOLL: I think really from if you're
looking at South Hampton, East Hampton.
MICHAEL STOLER: Are those -- ?
DON EVERSOLL: You know those are the --
I mean those are the two towns.
MICHAEL STOLER: And there's a lot of development -- the
prior week I spoke about the North Fork.
There's an enormous amount of development on 58 with
these big boxes. There's a Super Wal-Mart being built.
There's a Costco being built.
I heard there's a ***'s Sporting Goods being built.
Who's financing those?
ROBERT BERNARD: Have you done any of that, Kevin?
It seems to be done in Wall Street because of the
rates bigger companies do.
STEVEN DUBB: One of those I think was M&T but I
don't want to burst your bubbles.
MICHAEL STOLER: But there is --
KEVIN SANTACROCE: But there is a differentiation point,
Michael, like you said.
I think I would consider like Canal East on the
South Fork is South and then probably parts of
Jamesport would be considered North Fork.
Riverhead kind of has been a centralization point for
a lot of the consumers that can't afford to shop
and live so that's why you have a big -- the big box
stores going to Riverhead plus the zoning won't
allow it either in the two forks.
MICHAEL STOLER: Well what about Hampton Bays?
KEVIN SANTACROCE: Commercially it's tough.
I think there's on the smaller commercial
properties I don't think you see high rents there
and you see more consumer market.
MICHAEL STOLER: But isn't Hampton Bays more of a
year round, people who live in Hampton Bay is
more a full time residents over there?
And I think even the summer residents are much
less than the South Fork as we would say, the Hampton Bays.
KEVIN SANTACROCE: Absolutely. Sure.
Price points are much lower.
They didn't get impacted in terms of the down side
from '08 to 2010 with the dollars of the depreciation of
their homes but they -- because it's mostly again --
MICHAEL STOLER: Now last year
when you were on my show and your partner was
on my show, we were talking about the Rechler Development --
KEVIN SANTACROCE: At the airport?
MICHAEL STOLER: The West Hampton and
really nothing has happened.
What -- do you see anything happening?
KEVIN SANTACROCE: Not too much. I don't know.
Maybe Mitchell needs to come back on.
I don't know.
MICHAEL STOLER: You know what Mitchell said to me
unfortunately? He said I'm staying out in the
South Fork and I'm not driving -- coming into the city much.
But I mean you have your development right over there.
DON EVERSOLL: Right down the street.
MICHAEL STOLER: Right down the street. So do you see --
DON EVERSOLL: There's some activity
but it's -- I think it needs to achieve
a critical mass and once that happens then I think --
MICHAEL STOLER: Do you believe perhaps one of the
complaints about the South Fork is that I mean the
motels which are the -- they're motels even though
they call them hotels -- on the South Fork
are really small motels.
They try to make them boutiques but they're
still old 30, 40 year old hotels.
DON EVERSOLL: My 30 or 40 too?
MICHAEL STOLER: Right, okay, do you believe that
these -- they're even longer -- do you believe
that there's a need for like they built in
Riverhead a Hyatt hotel--
KEVIN SANTACROCE: I think in that area there is. I think the
Hyatt -- if we have some knowledge about that hotel
specifically they've had a very good occupancy as well as the --
MICHAEL STOLER: But I'm talking more
about now going to the South Fork as opposed --
ROBERT BERNARD: Is there a need for them
-- yeah but it will never happen.
DON EVERSOLL: No question.
ROBERT BERNARD: It will never happen out there.
STEVEN DUBB: There have been some nicer but
smaller hotels that have been built.
The Topping Rose House in Bridgehampton and the
Reform Club in Amagansett is -- they charge a
thousand a night for room rate.
MICHAEL STOLER: So let's talk specifically about --
because we're talking about the residential development.
Tell me about your development and the story
about how it's happening because there is a need in
South Hampton. There's also a need in West Hampton.
We'll get to Don in a second. Tell me about that.
STEVEN DUBB: So we're building --
our community is called Bishop's Pond. It's in --
well mostly in South Hampton Village, it's 77 homes.
MICHAEL STOLER: What do you mean mostly?
STEVEN DUBB: So the town, village --
MICHAEL STOLER: Is there a dividing line?
STEVEN DUBB: It's exactly right.
The town village line goes right through our community.
So of the 77, 55 are in the village and 20 are
technically in the town. But we like to say in
South Hampton Village and we're working to get the
entire community brought into the village because
it would be much simpler that way. It's a 13 acre property.
We're building flats which are one over one units and
townhouses and they go from 2,000 feet and three
bedrooms with nine foot basements to 3,000 feet
with another 1500 feet if you want to finish the
basements and they're very nice.
MICHAEL STOLER: One car garage or?
STEVEN DUBB: One car garages.
Not necessarily by choice.
The town and the village are biased against seeing
garage doors, or at least they were with us.
So we settled on single car garages with some really
nice wood garage doors.
MICHAEL STOLER: Now what about amenities?
I mean so you're a condo association, right?
STEVEN DUBB: It's a condominium and we've got
a 3800 square foot clubhouse and a swimming
pool that overlooks the central pond that the
whole community is built around.
So the clubhouse is heavily focused on gym and
on fitness and we've got an outdoor barbeque but
the amenity is really the South Fork.
It's South Hampton Village.
It's Coopers Beach a mile away.
MICHAEL STOLER: So you have all that over there.
Talk to me about Timber Ridge?
DON EVERSOLL: It's the same thing.
I mean we're in the village of West Hampton Beach
which is a real positive as we look at it
because you have the access to the beach.
MICHAEL STOLER: I mean you're only like a mile.
DON EVERSOLL: Yeah, a mile. You're right there and
it's a fabulous -- Rogers Beach is one of the
premier beaches on the South Fork.
We consist of 39 homes, townhouses, all with three
bedrooms, two and a half baths, nine foot ceilings
in the basement, nine foot on the first floor.
MICHAEL STOLER: One car garage?
DON EVERSOLL: One car garage.
About 2200 feet and priced from the mid 5's -- 550 to 700,000.
MICHAEL STOLER: And similar to Steven a clubhouse?
DON EVERSOLL: A clubhouse and again a fitness
facility and a pool, barbeque.
MICHAEL STOLER: I've seen ads that okay the irony is
since Don and I remember when the New York Times
had real estate advertisements before he
was born, okay but I do see some ads in some of the newspapers.
How are you marketing and how -- because you're his
lender, okay. My friend Jim is your lender.
How do you market these and how do people find out
about home -- new home building out in the South Fork?
DON EVERSOLL: I mean obviously it's changed dramatically.
I've been in this business for six decades now.
And obviously it's changed rather dramatically.
Used to be all print mag -- all print and some
radio, billboards, that was the type of media that
we used to drive traffic. Today it's internet.
Huge amount internet.
But for our market, we're finding it certainly helps
to advertise in the Times and to get people, as
Steven said, they're coming from the City.
Many people are coming from the City using this
as their second home and so they'll be sitting
about -- sitting in their condo in Manhattan or
Brooklyn and they'll read about some of the
advantages and they'll drive out to Bishop's Pond
or Timber Ridge and take a look.
MICHAEL STOLER: And you -- how are you marketing it?
STEVEN DUBB: Well so I've been in the business for
six years but compared to six decades.
But actually in the last six years I've seen a
shift from print based advertising to even more
internet marketing search engine optimization and social media.
But like Don said, I don't feel comfortable unless
I've got an ad in the Times and I've seen the Times pull
a lot for us in this community and we've got a website.
We've got search engine optimization, Google
clicks, Facebook and that pulls as well.
ROBERT BERNARD: You do something interesting too
I think is because you open up a retail front, right?
STEVEN DUBB: Good point.
I should mention that. Yes.
We opened a retail store on Job's Lane which is the
second street in the village in South Hampton.
We opened that in early March and that's been big
for us because it's brought a lot of foot
traffic that was in the village --
MICHAEL STOLER: Right, because you're in the town.
ROBERT BERNARD: Yeah, I thought that was a great
idea to generate because you do get a lot of people
that walk around and you always see a lot of realty
stores there but specifically for a project
like theirs I thought that was a good idea.
MICHAEL STOLER: What about -- since I happen to be on
1010 WINS and I do know people hear me a lot on
that, people are in their car, driving out.
Do you think radio advertising has just the
buzz word to identity on that?
DON EVERSOLL: Real estate is obviously a major purchase.
And it's not an impulse buy and I think radio tends to help
more of an impulse buy or certainly make awareness.
MICHAEL STOLER: Or branding sometimes.
DON EVERSOLL: Or branding.
But the dollars that we have to spend -- I mean if
we're selling Ford automobiles it's one thing.
You want to brand it. You want to make it --
put it before the consumers as a quality product.
Ours isn't --we don't have those kinds of dollars to do so.
MICHAEL STOLER: Different dollar and cents budget.
DON EVERSOLL: And we find we spend a lot of time
working with brokers. We work with brokers.
MICHAEL STOLER: So both of your developments besides
you selling it's open to the brokerage community.
DON EVERSOLL: That's correct.
STEVEN DUBB: Yeah so we listed it through Corcoran
so we had one brokerage to deal with rather than five
or six fighting over the same commission but it's
open to all brokers.
MICHAEL STOLER: And you have --
you're open to the general public?
DON EVERSOLL: We're open to everybody.
MICHAEL STOLER: Okay so what kind of business are
the banks seeing in the South Fork today?
Who are your customers today?
KEVIN SANTACROCE: Well we still have a lot of
clients that are the owners of commercial real
estate, investor property in three markets.
And we're starting to see at least on the high end
home construction more activity there.
So we're getting more applications for lines of
credit or increasing letters or credit for
some of their activity.
The small business customer, someone that is
particularly in the construction is still struggling.
There was a lot of weeding out, if you will after
last cycle and so they're still not back on footing
and so -- and I still think that segment of the
market is still struggling.
MICHAEL STOLER: And what about you and Capital One?
ROBERT BERNARD: Well, for commercial real estate it's --
MICHAEL STOLER: Commercial real estate and
just in general out in Suffolk County and the
South Fork, what are you seeing?
ROBERT BERNARD: Well we're looking at one of the
better shopping centers right now in Hampton Bays area.
Looking to finance that. But as I said there's just --
MICHAEL STOLER: I mean have you done any
new home building or you're really --
ROBERT BERNARD: Before the downturn we did quite a bit.
We did some spec building for some really high quality
builders and we also did some for some users who were --
MICHAEL STOLER: What about --
because I had seen surprisingly there was
some spec housing in the South Fork being built --
KEVIN SANTACROCE: There is now. It's come back.
MICHAEL STOLER: I mean we're talking about expensive homes.
KEVIN SANTACROCE: Absolutely.
MICHAEL STOLER: Being spec built.
STEVEN DUBB: I think the market east of the canal
generally stayed stronger than the housing market
and the rest of Long Island.
Almost like they're two different --
MICHAEL STOLER: But how is somebody who's building a
spec home for -- that they're selling for five
to eight to 10 million dollars building that home?
I mean is it out of their cash flow?
KEVIN SANTACROCE: Well you have to remember, I don't --
there's a lot of people still sitting on liquidity
and for the last few years it was preservation of that.
Now they're looking for yield.
They need to see some yield.
So I think a lot of it is being funded by investment money.
There aren't as many banks involved in it from what I see.
MICHAEL STOLER: What do you mean by investment money?
KEVIN SANTACROCE: Hedge funds, individual private people.
MICHAEL STOLER: Do you think
hedge funds are financing these?
KEVIN SANTACROCE: Absolutely.
MICHAEL STOLER: When I did this show on the North Fork
the one area that I didn't bring was the cape advisors --
KEVIN SANTACROCE: Yeah the watch factory.
MICHAEL STOLER: The watch factory which is the
conversion of the Bulova watches.
And I mean you're at 800 to 2 million.
You're at 5 to 800,000.
The cape advisor they're talking about 2 to 10 million?
STEVEN DUBB: I think above that.
MICHAEL STOLER: And that is a private equity fund
that is cape advisor the money behind it.
KEVIN SANTACROCE: Well it's really Deutsche Bank
that financed the big construction there.
MICHAEL STOLER: Right but it's due to a private
equity and you can call Deutsche Bank but there
are a variety of reasons.
There's a lot of equity in the deal and that's also
taken a couple of years I would say.
STEVEN DUBB: But I hear they're selling now and
selling well which is good because it's good for us.
DON EVERSOLL: It's good for us.
MICHAEL STOLER: Now are there any more
developments that you see happening in that market
because you've been a visionary, you've done
many in the neighborhood but do you see --
KEVIN SANTACROCE: In terms of scale there's
behind these there are some land behind by
Channing Daughters Winery back there.
There's about 40 lots and you're going to see some
development there. That's a big track.
MICHAEL STOLER: And how expensive will that be?
KEVIN SANTACROCE: Well right now the lots are
going anywhere from 5 to 750.
With homes probably 4,000 to 5,000 square feet but
they're probably a few months down before they're --
they have a group of subdivision.
MICHAEL STOLER: So the land is being sold by a
developer and then --
KEVIN SANTACROCE: It's been transacted already.
MICHAEL STOLER: Okay and then there's a separate --
the people are buying the land and then they're
building the house separately.
STEVEN DUBB: Right.
DON EVERSOLL: Right.
MICHAEL STOLER: Would you finance that type of deal?
ROBERT BERNARD: Depends on the strength of the developer.
We have done some for sale jobs. We're still very
conservative with those. But we are looking at --
MICHAEL STOLER: Is there a developer selling the land or --
KEVIN SANTACROCE: Well what happened is
the first group got the property and contract.
Went through all the process of getting the
subdivision approved and then sold maybe 10, 15
lots to one, has some others that they're going to hold.
MICHAEL STOLER: How hard is it to get approvals?
KEVIN SANTACROCE: That was three years for that particular piece.
MICHAEL STOLER: And how long normally since you've
been around a couple decades as you said --
how long does it take to get approvals on the South Fork?
DON EVERSOLL: A long time. A long time.
MICHAEL STOLER: What do you attribute this --
DON EVERSOLL: Well look, it's critical mass.
If you want to subdivide two lots, it's probably
faster than if you want to do 40.
It's a matter of scale.
MICHAEL STOLER: For example when you did the
other development in West Hampton how long did that take?
DON EVERSOLL: Well the other development it was
essentially it was a noxious use.
It was a racetrack, a drag strip and so the neighbors
were very happy to see it change particularly to a
retirement community because you don't have the
impact of the school for school age children
but Steven is right. If you look at the --
particularly when you're looking at homes that are selling
for three-quarters of a million dollars or
500,000, 600,000 to a million dollars
the ratable on that more than pays for
the schools and the cost of that.
And but every community wants a free lunch.
MICHAEL STOLER: In New York City there's a need
for urban retail. Do you see a need for urban --
for small-scale retail in the South Fork?
I mean in South Hampton, Hampton Bays,
Bridgehampton, Watermill, West Hampton. I mean...
STEVEN DUBB: Well I think it's there.
I mean you've got the village in South Hampton.
You have a lot of tenants whether they're whether
they're year round tenants or the summer tenants that
come in that owe -- that have stores in Manhattan,
a Theory, a Helmut Lang, Ralph Lauren.
So there's a -- we're really strong retailer
base in South Hampton, same in East Hampton.
MICHAEL STOLER: But what about the other outskirts?
I mean because I remember I think the shopping centers
you're talking about in Hampton Bays there's a couple.
The newer development over there and there's the old
one where the old King Cullen used to be.
And then there was -- nothing has really ever
happened to where the Macy's was.
There's a Macy's shopping center right near the diner.
KEVIN SANTACROCE: On the right, yeah.
I mean that's still I think pretty much
tenanted, that particular piece.
It's an older shopping center.
STEVEN DUBB: I think it's also really specific to
the area, so in West Hampton we were talking
before the show it's been -- you have spaces that
are vacant for years but in South Hampton that
seems to have a little bit more activity.
MICHAEL STOLER: I think there could be more
activity in West Hampton but I believe the problem
with West Hampton is getting approvals of the
town just in general.
Because I know that the bakery took them 10 years
to get approval to expand and now he's putting like
a restaurant in the back.
STEVEN DUBB: I think it's difficult everywhere on
Long Island. There's not one town that you
could really point to or maybe there's one but.
DON EVERSOLL: Patchogue.
STEVEN DUBB: Patchogue.
Is developer friendly but everything is difficult
and I think pieces of land like we're building on and
like Don are building on were few and far between
out on the South Fork and--
KEVIN SANTACROCE: Your approval process was quick.
STEVEN DUBB: Well relatively.
KEVIN SANTACROCE: It was comparatively and I think
it sounds like a similar situation.
STEVEN DUBB: Yeah and it was a couple of years and
we had nothing but support for the development from
the community and it still took a couple years to do.
MICHAEL STOLER: Now the interesting thing is you
know we were talking about the Hampton, the
Rechler Development which is taking a little slow but
in this similar manner there was that very fancy
automobile dealer with the restaurant.
DON EVERSOLL: A fancy restaurant.
MICHAEL STOLER: And you know that's been vacant
for at least three or four years and no one's been a
taker on that. And then even if you go through --
if you take Montauk Highway where the old Chevrolet dealer
was which is now taken over by the guy who used to have
the place in West Hampton, there's not really much in
development going on there.
What about Speonk?
KEVIN SANTACROCE: Not much.
The only area I would say that I see some momentum
is in downtown Riverhead. You have the new Suffolk Theatre.
That opened up in conjunction with the Hyatt
that opened up a year ago.
There's another project right on 1 Peconic Avenue
that we're involved in which is 58 units.
MICHAEL STOLER: You mean the affordable?
KEVIN SANTACROCE: It's workforce housing above
and there's retail on the bottom. Across the street from
the diner there's another 48-unit proposal going which
is adjacent to the Suffolk Theatre.
MICHAEL STOLER: And is that going to be workforce housing?
KEVIN SANTACROCE: Again, upstairs and then
downstairs retail. So downtown which
for a long time had been kind of stagnant.
You're seeing more activity in Riverhead that I see.
MICHAEL STOLER: So we're seeing there is a
resurgence in the South fork. The economy has helped
for development and things are, as one would say,
the apple is shining, being bright, right?
I'd like to thank Don, Kevin, Steven and Bob and
I'll see you next week.
♪ [Theme Music] ♪