The ultimate subdivision deal?? GSA selling Plum Island, NY!

[Dmitri L.]

This is fascinating:

https://resourcecenter.secure.force.com/pbs/Proper...

http://www.gsa.gov/plumisland

Containing approximately 840 acres, the island boasts sandy shoreline, beautiful views and a harbor strategically situated to provide easy access from the Orient Point facility or elsewhere. Architectural highlights include a lighthouse listed on the National Register of Historic Place built in 1869 along with buildings and battery stations constructed as part of Fort Terry, a military fort actively used during the buildup to the Spanish-American War and during World War I and World War II. Most of the other buildings and infrastructure on the island are of more modern design and development. Of particular note is a well-maintained 55,000 square foot glass and concrete administration building constructed in 1994. In addition to over 4 miles of existing paved roadway and 8 miles of gravel roadway, the island offers strength in its utility connections and capacity. Undersea cables transmit power and communications capability from Long Island to Plum Island, while an on-site power plant provides emergency back-up support. In addition to the foregoing, the island contains its own wastewater decontamination plant and extensive well water supply and distribution facilities.

What does an 840 acre private island - almost exactly the same size as Central Park - on the tip of Long Island, New York go for these days? It's difficult to fully grasp the scale of this beast, but the FAQs provide some interesting context:

Personal Property & Transportation Assets

Although the extent of personal property to be included in the sale has yet to be finalized, it can be assumed that all ferries and certain vehicles presently used by the fire and safety units on the island will be included.

You know you're playing with the big boys when someone throws in ferries as an after-thought.

Let's play a game of fantasy real estate development!

How would you put this deal together, how much would you pay, and what would be the exit strategy? What would you be looking for in your due diligence process? Prizes for:

- Closest guess for sales price (Bob Barker rules)

- Closest guess for development plan 

- Most creative!

(You might have to wait a little while for the results - it sounds like the transaction would only be closing in 2023!)

Here's my entry to get things started:

This is begging to be developed into a super-exclusive resort attraction of some sort, and milk the vanity of Manhattan's elites for all they're worth. Think the new Martha's Vineyard or Southampton. I'd go with:

- Develop a small resort with private beach villas all along the waterfront, plus common facilities. Can hopefully re-purpose some of the existing structures and facilities. Approx 100-150 keys. Update infrastructure as necessary - clearly, a heliport needs to be included, because who wants to drive when a helicopter will get you there in about 40 minutes from NYC? Prices per night starting in the $600 range - "Cheaper than the Maldives, and no jet lag!"

- On the long strip of land stretching out to the north-east, subdivide for luxury home builds - something along these lines where property on 3-5 acres could sell for 20-30mil potentially. Let's say around 20 of these, plus a single massive 15-20 acre property right on the East Point - shooting for about 100mil for that one.

- Leave untouched as much of the remaining land as possible - both for a greater feeling of privacy and exclusivity for the resort guests and owners, as well as for environmentally responsible development.

Pulling all of the expense figures out of thin air, I would pay 125mil for the property.

The main concern for due diligence would be environmental contamination from previous activity - both military and research facilities.

Any takers? Although I don't plan to be bidding on this one just yet (maybe next year!), it's a great exercise both to think creatively about how to add value to an asset, as well as stretch our perception of what is a reasonable number. This is truly a 1000x Rule exercise - instead of thousands, we are investing play money millions!

Thanks for playing!

-Dmitri