[KRM0614]

Very interesting although I would expound on it. The Morse’s have equity interests in the contractors who service this placeThe Morse’s also receive a royalty fee for every business who rents from them as well. They also built a design center where the house add ins are marked up 300-500% also utilizing their equity own contractors They purchased the water company and the residents through increases indirectly paid for the purchasing costs. Along with other revenue streams too long to mention here notwithstanding the medical stream, exploring possibility of an IPO might open their financial and legal dealings to scrutiny.not just financials but their business practices and legal expenses. If they go public, the residents may become very unhappy because they know they have to pay dividends and meet projections. Translated into real life the expenses to live here will skyrocket due to going public. It’s also possible they want to monetize their shares to bring in outside investors.

[graciegirl]

Originally Posted by Villages Kahuna

I’ve thought about why this latest generation of the Morses has purposely and callously begin to change the character The Villages, and the relationship with residents it has taken decades to develop. The construction of densely-sited apartments at Brownwood were first. Then the destruction of Hacienda Hills CC and announcement of another large high-rise building, and recently plans to build apartments in the recently-closed resident’s club, Katie Belles. I believe this is just the beginning. I think I know why.

These actions are what is necessary if the Morse family has plans to sell their ownership interests in The Villages or take the business public. The Villages is profitable, no doubt. But it doesn’t have enough consistent, repeatable earnings to maximize it’s value in such a sale. Repeatable less risky earning flows are what financial buyers and the capital markets use to value businesses.

Businesses are valued as a multiple of earnings, whether sold to a single financial buyer, sale to a public company, or as an IPO on the stock market. Yes, The Villages has some repeatable, consistent and growing sources of earnings—rent from all the shopping centers and the town squares retail, the bank, the championship golf clubs. But just not enough repeatable income to optimize it’s value, which is how the capital markets will value The Villages.

Without a stronger source of repeatable, growing income The Villages as a business will be valued as just another home builder. Profits are great so long as the owners keep buying land, building houses, and selling them to new residents. But if they ever stop that cycle, earnings drop dramatically. The capital markets are forward-looking and will ascribe a much lower multiple to the home-building part of the business than to the parts that will be ongoing if the three Morse siblings who currently own The Villages leave or retire. To increase the value of the Morse ownership more retail, apartments, or somehow monetizing their ownership of everything in The Villages not owned by residents will be necessary.

The three Morse siblings are each billionaires individually, according to Forbes magazine. But it’s all “paper wealth”. If they sold their ownership of The Villages, it would be worth nowhere near that amount. They’ve reached an age when they are almost certainly considering retirement. And among the dozens of Morse-Schwartz grandchildren and great grandchildren, there are only a few as talented as the siblings who want to work as hard as they did, or work for The Villages at all.

Selling the business is the only way the siblings can monetize their long, successful careers and retire. And to increase it’s value the business needs more repeatable, less risky sources of earnings. Unfortunately, achieving those objectives will probably require a change in the relationship and trust that tens of thousands of people who have “bought the dream” have placed in them.

I don’t have any inside information, but I did retire after a long career as an investment banker. I don’t want to be a Debby Downer, but what I see are owners that are preparing to “cash out”. It won’t happen overnight, it might take a few years, but don’t think we’ve seen the end of efforts to monetize their ownership by the Morse siblings. There will certainly be more apartments, such as in the new “non-resident” section adjacent to the new school complex and who knows what in the recently-announced 400 acre medical business section in the southern part of The Villages. I think that some of the amenities that have been free until now, will carry a cost in the future.

If you see something differently, post your feelings here. All I’m saying is that we should all remain aware of what’s happening that might change “Florida’s Friendliest Hometown”.

I do think something different. And if the worst happened and they sold it? Well I am sure you are more than a dozen years older than when I first read you on this Forum. We can't change the future and we really don't have as much of it to enjoy as we did some years ago.

I trust in the integrity of Jennifer, Tracy and Mark. I see no reason not too. I see what I perceive as a recent rather organized attempt to discredit them that I really think is in part political.

So I disagree. I have very few good qualities but I will admit being vain about my judgement on people's character. I am not wrong too often.

Wish some of those apartments were sold as condos, or they had villas that included all exterior maintenance. We’d like to downsize and not have to worry about yards, exterior painting, etc., but I don’t like the idea of paying thousands a month in rent.

[NJRICHARD]

The density equation should be considered when building any high rise apartment building. When a relatively small amount of land normally used for single family homes is replaced with a 'high rise', the density increases immediately; the amount of people, golf carts, visitors, etc. Large concentrations of people in a small area must be carefully calculated as to the comfort of the people already living here versus the profit motive.....unfortunately the profit motive almost always wins out. The Villages as we know it will also change.

[dewilson58]

Originally Posted by KRM0614

If they go public, the residents may become very unhappy because they know they have to pay dividends and meet projections. Translated into real life the expenses to live here will skyrocket due to going public.

Agree. Just like when Walmart went public. OH WAIT. Walmart is the cheapest place to shop. Hmmmmm. I guess I disagree.


The sky is falling, the sky is falling.

[OhioBuckeye]

Originally Posted by Villages Kahuna

I’ve thought about why this latest generation of the Morses has purposely and callously begin to change the character The Villages, and the relationship with residents it has taken decades to develop. The construction of densely-sited apartments at Brownwood were first. Then the destruction of Hacienda Hills CC and announcement of another large high-rise building, and recently plans to build apartments in the recently-closed resident’s club, Katie Belles. I believe this is just the beginning. I think I know why.

These actions are what is necessary if the Morse family has plans to sell their ownership interests in The Villages or take the business public. The Villages is profitable, no doubt. But it doesn’t have enough consistent, repeatable earnings to maximize it’s value in such a sale. Repeatable less risky earning flows are what financial buyers and the capital markets use to value businesses.

Businesses are valued as a multiple of earnings, whether sold to a single financial buyer, sale to a public company, or as an IPO on the stock market. Yes, The Villages has some repeatable, consistent and growing sources of earnings—rent from all the shopping centers and the town squares retail, the bank, the championship golf clubs. But just not enough repeatable income to optimize it’s value, which is how the capital markets will value The Villages.

Without a stronger source of repeatable, growing income The Villages as a business will be valued as just another home builder. Profits are great so long as the owners keep buying land, building houses, and selling them to new residents. But if they ever stop that cycle, earnings drop dramatically. The capital markets are forward-looking and will ascribe a much lower multiple to the home-building part of the business than to the parts that will be ongoing if the three Morse siblings who currently own The Villages leave or retire. To increase the value of the Morse ownership more retail, apartments, or somehow monetizing their ownership of everything in The Villages not owned by residents will be necessary.

The three Morse siblings are each billionaires individually, according to Forbes magazine. But it’s all “paper wealth”. If they sold their ownership of The Villages, it would be worth nowhere near that amount. They’ve reached an age when they are almost certainly considering retirement. And among the dozens of Morse-Schwartz grandchildren and great grandchildren, there are only a few as talented as the siblings who want to work as hard as they did, or work for The Villages at all.

Selling the business is the only way the siblings can monetize their long, successful careers and retire. And to increase it’s value the business needs more repeatable, less risky sources of earnings. Unfortunately, achieving those objectives will probably require a change in the relationship and trust that tens of thousands of people who have “bought the dream” have placed in them.

I don’t have any inside information, but I did retire after a long career as an investment banker. I don’t want to be a Debby Downer, but what I see are owners that are preparing to “cash out”. It won’t happen overnight, it might take a few years, but don’t think we’ve seen the end of efforts to monetize their ownership by the Morse siblings. There will certainly be more apartments, such as in the new “non-resident” section adjacent to the new school complex and who knows what in the recently-announced 400 acre medical business section in the southern part of The Villages. I think that some of the amenities that have been free until now, will carry a cost in the future.

If you see something differently, post your feelings here. All I’m saying is that we should all remain aware of what’s happening that might change “Florida’s Friendliest Hometown”.

Since the Morse’s are in the business to make money, I’m making a big guess but Katie Belle’s probably isn’t making money for them. So renting or selling apartments is money always coming in. Kahuna, I know TOTV doesn’t want me to talk about anybody or bad mouth a political party. Maybe TV sees the writing on the wall & thinks if a certain political party wins the election & they do get away with what they say they are going to do. It could lose a lot of profit for TV or even bankrupt them. So who know why Morse’s are doing something else with Katie Belle’s but all most of us know it has to have something to do with money! If Katie Belle’s was making a profit Morse’s wouldn’t be doing what they are doing. Believe me Morse’s have made more money than you or me in 4 life times. They built & sold 120,000 plus home & pretty much own TV. They probably see the writing on the wall about where our country is headed. Good post, Kahuna!

[billethkid]

Two or more ways to think about the issue.

One the specific of how does what is going on affect me and my lifestyle?

How does the issue of apartments affect TV overall?

My opinion....... the overall scheme/concept of TV the addition of a few apartment buildings within the thousands of acres and among hundreds of thousands of residents will have very little impact (unless you live within sight of the complex).

[ProfessorDave]

OMG! I should have thought of this. All of your logic fits! I've had experience taking very large public companies private - and large private companies public - and - you nailed it. How did I miss that? My thoughts were buried in the weeds. Thanks for sharing...

Some of the the responses to your thoughts are typical of this site. For example, in what way do you thoughts "discredit" the Morse family? They don't. Most billionaire family's at some time do things to make it easier for family members more flexibility in their longer term investments. The Walton's is a great example.

I'm also recognize that there are consistent contributors who resent any negative thoughts shared. To me - that is so naive, and not very "democratic" in the logic. For example - on the one hand, I thank God every day that I was born in the United States; I thank God everyday I found The Villages by accident. I thank God every day that my early career foundation began at Johnson & Johnson. HOWEVER, none of those are perfect - and by a God given ability to apply "critical thinking" - I constantly questioned lots of things they did. Frankly, the Founding Fathers of our country deliberately set up our form of government precisely to insure "HEALTHY TENSION" - because without it, you have less optimal results.

Therefore, with all due respect, those who want to be ostriches... defend the Morses on every challenge anybody has - enjoy the darkness. And for everybody who sees the Morses as the enemy of the people, hopefully that agony is fulfilling in some way.

To me - some of the Morse's approach (process) I've witnessed in the past year especially is disappointing. A society is not purely based on "if I own it - I can do anything I want" which is such a naive view of how societies work and function. (PS: the father of capitalism - Adam Smith - didn't even believe that!)

In summary. The original post sheds some extraordinarily insight hypothesis on the "drivers" behind recent decisions. The hypothesis is just that - a "best guess" - BUT - it is a very plausible best guess - which is why I find it interesting, whether true or not. I dislike some of the strategic decisions the Morse family has made - and as importantly - how they communicated them - and the perceived attitude of arrogance they demonstrated. For me, that means a) I trust them less, b) I'm less likely to refer friends and family to move here - or - be even more careful where in The Villages they move, but c) I personally still find this to be by far my best option for living the rest of my life on this earth. I don't find any of that incongruent. But in the "black and white" thinking society we live in, I'm sure that some reading this post think it is intellectually incongruent.

[askcarl]

If all of The Kids are in fact Billionaires, Why even live here? Among all the hate and discontent.

I doubt anyone, outside The Family, has any real idea of their Net Worth. I do know that The Family has made Billion $ at risk investments multiple times over the decades in the development of farmland in the middle of nowhere. Cows outnumbered humans in these counties.

So, what should be the reward for being All In on a dream many years ago. And then double down over and over? Some real history: The Villages, Florida - Wikipedia

Every one of us made it here by making many choices, many decisions. Some good, Some not so good. None of us had the Brains or guts to attempt a Dream this Grand. 1960's Laws against selling land by mail. 1980's Savings and Loan debacle. 2000's dot.com crash. 2008 Market "correction". Not one guarantee of success. Many times and reasons to bailout. Plenty of crushed Florida Developments. [PDF] A Brief Florida Real Estate History - Free Download PDF Starting on page 22 to 31.

This business, The Family, is doing exactly what all businesses do. Respond to Change. To economic forces, Laws, customer expectations (market forces, competition, labor costs etc), a Pandemic and not declaring bankruptcy. No nefarious plan to ruin our lives.

Would the vitriol be as intense if any group from this list ran the show? The World’s Largest Public Real Estate Companies 2020

The only Constant is Change. If you had stayed in your last town, it has changed. If you stay here long enough, The Villages will change. Will it be for better or worse? That depends largely on our ability to adapt to the changes or continue with a This Sucks outlook.

Is this place perfect? Far from it. Is there a better place to be? Feel free to post the address.

[tophcfa]

Originally Posted by KRM0614

Very interesting although I would expound on it. The Morse’s have equity interests in the contractors who service this placeThe Morse’s also receive a royalty fee for every business who rents from them as well. They also built a design center where the house add ins are marked up 300-500% also utilizing their equity own contractors They purchased the water company and the residents through increases indirectly paid for the purchasing costs. Along with other revenue streams too long to mention here notwithstanding the medical stream, exploring possibility of an IPO might open their financial and legal dealings to scrutiny.not just financials but their business practices and legal expenses. If they go public, the residents may become very unhappy because they know they have to pay dividends and meet projections. Translated into real life the expenses to live here will skyrocket due to going public. It’s also possible they want to monetize their shares to bring in outside investors.

Another very interesting and insightful post. Having to open up their books by going public could open up a huge can of worms. However, that could be avoided by selling to a private equity firm that would be the only party privy to the books. After a period of time the private equity firm could take the enterprise public to cash out. Not saying that’s what will happen, but it’s certainly a possibility?

[Topspinmo]

Originally Posted by billethkid

Two or more ways to think about the issue.

One the specific of how does what is going on affect me and my lifestyle?

How does the issue of apartments affect TV overall?

My opinion....... the overall scheme/concept of TV the addition of a few apartment buildings within the thousands of acres and among hundreds of thousands of residents will have very little impact (unless you live within sight of the complex).

Or they build more that few, lots of empty commercial lots and buildings around.

[Topspinmo]

Originally Posted by KRM0614

Very interesting although I would expound on it. The Morse’s have equity interests in the contractors who service this placeThe Morse’s also receive a royalty fee for every business who rents from them as well. They also built a design center where the house add ins are marked up 300-500% also utilizing their equity own contractors They purchased the water company and the residents through increases indirectly paid for the purchasing costs. Along with other revenue streams too long to mention here notwithstanding the medical stream, exploring possibility of an IPO might open their financial and legal dealings to scrutiny.not just financials but their business practices and legal expenses. If they go public, the residents may become very unhappy because they know they have to pay dividends and meet projections. Translated into real life the expenses to live here will skyrocket due to going public. It’s also possible they want to monetize their shares to bring in outside investors.

You don’t become billionaires by spending you’re own money.

[fsusix]

Very well explained and said - thank you for sharing.

[car1chr2]

Spot on. Thanks.

[Stu from NYC]

Very interesting thread.

I have been thinking they are looking for new revenue streams when they started with apartments. Try a few things and see what works and go full steam ahead.

No idea if they are considering going public or selling out. At some point they presumably would want to diversify their investments.

Interesting to find out what local entities they either own or have invested in.