Geosam Capital US LLC

Geosam

In the wake of the recession, Geosam Capital turned incomplete developments into thriving communities in the Southeast. By Tim O’Connor

For a young company, Geosam Capital has thick roots in the residential and community development industry. Geosam is an outgrowth of Armco Capital. The Armoyan family founded Armco in the early 1980s and grew it into one of the largest development firms in Atlantic Canada with numerous planned subdivisions in Nova Scotia and New Brunswick. The company began investing in the U.S. market in late 2000s by acquiring broken condominium projects around Florida. Following that initial foray, Armco formed Geosam and purchased Venetian Bay, a 1,410-acre unfinished planned unit development in New Smyrna Beach, Fla., designed around a village concept with a town center.

In addition to Venetian Bay, the company bought a large portfolio of assets in Atlanta and Charlotte, N.C. In all, Geosam now holds 75 divisions and upward of 3,500 lots, most of which were purchased out of distress.

Taking over distressed properties poses a challenge in determining where the development went wrong and how it can get back on track. Sometimes that requires amending the original agreements to reflect the shifts in the market. The original development agreement for Venetian Bay has been modified more than 10 times, according to Vice President of Operations Martin Pham.

Those changes were about finding efficiencies or creating better conditions for development. When Geosam acquired Venetian Bay it discovered that parts of how the community was developed didn’t make sense. The original developer over-promised on commercial while housing projects lagged behind. At the time, Venetian Bay had a commercial requirement for 350,000 square feet of retail in a community with only 1,000 rooftops, creating an imbalance between shops, restaurants and homes that meant there weren’t enough customers to support the businesses. To improve conditions, Geosam changed the ratio of commercial to residential in the development agreement and focused on filling in the empty space and creating more housing. It took time, but the project eventually hit the critical mass of people that was needed to create a robust commercial environment.

Geosam2

Building on Success

Geosam’s effective management and willingness to make adjustments turned Venetian Bay from a struggling development into a premier community along Florida’s Atlantic coast. About half of Venetian Bay’s planned 2,200 units are now built.

But the strength of the development enabled Geosam to expand upon the original vision. In addition to the project’s boundaries, the company acquired surrounding land to develop complementary pieces, such as the Palms at Venetian Bay and Verano at Venetian Bay. The two projects could add nearly 1,200 rooftops to the area.

The company’s next big project is located about 2.5 miles from Venetian Bay. Coastal Woods will be an 850-acre development with 1,250 homes built in multiple phases. The project is still in the early phases. Geosam is working toward gaining site approvals from the city of New Smyrna and expects to begin developing the first 290 lots early next year. “The biggest challenge at any project in the country is getting entitlements done and working through those agreements with local governments,” COO David Peter says. GeosamInfo

Geosam creates the development plan but it still needs the help of other companies to see that vision through. Geosam does not build the homes itself. Instead, the company develops the project and sells the lots to homebuilders. The homebuilders create a competitive but collaborative environment by differentiating themselves through finishes and features. Each community has modern amenities, such as pools, but homes are offered at a range of prices. A duplex might sell in the low $200,000s while the asking price for larger homes could top a million. “We like to view ourselves as pretty broadly inclusive developers,” Peter says. “We’re trying to build communities that cater [to buyers] from starter home to dream home.”

Committing to Market

Although its roots are in Canada, Geosam intends to be in the U.S. market for the long haul. The company has no interest in developing properties just to cash out and it even manages several developments and multifamily projects. The size of the projects also necessitates a long-term commitment. “These are projects that are five to 10 years,” Pham explains.

But its desire to grow its presence in the southeast could require Geosam to broaden its existing market to find promising locations. “The availability of large pieces of land and getting entitlements is a complex matter we have to work through with local governments,” Peter says.

Armco has expressed interest in expanding Geosam in the Carolinas and Tennessee, but the company has not taken that step quite yet. “We will always be poised to take advantage of markets when the markets are ripe for acquisition,” Peter says.

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