Riding a Real Estate Roller Coaster

Fla. Developer WCI, and Its Columbia Condo Plans, Endure Several Ups and Downs

For nearly two years, a Florida developer has been battling to build a luxury condominium tower in the Howard County town of Columbia, sparking a rancorous debate over the future growth of the community's downtown.

The company, WCI Communities, has fought off lawsuits to stop the edifice from rising. Legislators have tried to limit the building's height. And community groups have formed on both sides.

But all the while, a much bigger soap opera involving the corporation has played out amid the worst housing downturn in decades. In filings with the Securities and Exchange Commission, WCI Communities outlines the pressures bearing down in it.

Billionaire and activist investor Carl C. Icahn has pushed himself onto the company's board after launching an unsuccessful takeover bid last spring. Condominium buyers are backing out of contracts even as prices fall. Most pressing these days, the company is trying to work out a new financing agreement to keep bankers from foreclosing on its loans.

It is a dizzying reversal of fortunes for a company once considered the BMW of home builders -- an industry favorite and a Wall Street darling -- that expanded into the Washington area two years ago, just before the market turned. The story of WCI Communities' rapid decline is a study of the larger woes of a housing industry caught in an economic vise.

WCI Communities' founding chief executive, Alfred Hoffman Jr., and his partner, director Don E. Ackerman, catapulted themselves into the upper echelons of the Florida development world in 1995, when they bought the real estate division of Westinghouse Electric for $556 million.

The pair had already been players in the market for more than a decade, but the Westinghouse purchase gave them control of a sizable inventory of construction projects in and around marquee retirement and leisure communities such as Pelican Bay, Naples and Fort Myers.

The move helped make Hoffman, who become U.S. ambassador to Portugal in 2005, a heavy hitter in state and national Republican politics.

As chief executive, Hoffman expanded the business by cutting deals to build championship golf courses, luxury resort hotels, houses and condominiums. Hoffman focused the company on affluent baby boomers, who economists predicted would be a key driver of development in Florida for decades to come.

"You can't stop it," Hoffman told The Washington Post in 2003, describing the development march from southwest Florida toward the Everglades. "There's no power on Earth that can stop it!"

After becoming a public company in 2002, WCI Communities rode the wave of Florida's real estate boom to its crest, taking on considerable debt to expand its luxury condo business as property values soared.

At first, the strategy delivered handsome paydays. From 2002 to 2005, WCI Communities more than doubled its yearly sales from $1.2 billion to $2.6 billion. Its profit leaped 76 percent to $186.15 million.