N.C. firm purchases Kiawah Partners New owners don’t plan any immediate changes

The back of the Kiawah Island River Course clubhouse sits on a bluff overlooking the Kiawah River.

The company that helped transform Kiawah Island from a remote piece of Lowcountry paradise into a world-renowned playground for the well-heeled has been sold, a year after a bitter family dispute erupted over the firm’s valuable real estate.

The deal ends a 25-year run for the original local development dynasty while marking the start of a new era for Kiawah Partners under Charlotte-based South Street Partners and its financial backers.

The North Carolina real estate investment firm announced Monday that it has purchased the partnership, confirming speculation that has been circulating for several weeks.

The purchase price was not disclosed, but it was between $360 million and $400 million, including previous debt the buyers are assuming, according to a person close to the deal.

South Street managing partner Patrick Melton said the acquisition represents a long-term play for his firm.

“We’re looking at it as a 10-year investment, maybe longer,” he said Monday. “The real estate market will tell us.”

No immediate changes are planned for employees, property owners or members of the private Kiawah Island Club that was part of the sale, he said.

“It’s more of staying the course,” Melton said.

The firm was drawn to the deal by the high quality of the development that’s already in place on Kiawah combined with the island’s “sterling reputation” in the second-home and resort real estate business.

“We’re excited to be a part of it,” Melton said. “It’s a special place.”

Another selling point was Kiawah’s proximity to Charleston.

“Charleston is about as good as they come,” he said.

South Street said it will abide by the existing development pact between the Kiawah Partners and the Town of Kiawah. All island property owners are being notified about the ownership change.

He also said South Street plans to proceed with the proposed 50-home development on about 20 acres at Captain Sam’s Spit, a controversial project that conservation groups and other opponents are seeking to block.

The sale of Kiawah Partners involved valuable pieces of real estate in South Carolina, Ireland and the Caribbean. South Street is “evaluating” the overseas holdings, Melton said.

The local properties that changed hands include about 470 undeveloped lots and two private 18-hole golf courses on Kiawah — the River Course and Cassique — as well as Kiawah Island Real Estate, Kiawah Island Utility, hundreds of acres on Johns Island and the Freshfields Village commercial center at the end of Betsy Kerrison Parkway.

The separately owned Sanctuary hotel and the four other golf layouts on Kiawah, including the famed Ocean Course, were not part of the sale.

As blockbuster real estate deals go, this came together remarkably fast given the size and complexities of the transaction.

It resulted from a family feud and lawsuit over control of the Kiawah Partners’ vast holdings. The central figures were CEO Charles P. “Buddy” Darby III and first cousin Leonard Long, a longtime executive vice president with the firm. Their falling out triggered the lawsuit last June.

The complaint was filed in state court by Long and a group of partnerships, trusts and individuals who were minority owners in real estate ventures led by Darby. They demanded that the assets of those businesses be dissolved and for the properties to be either divided up or sold.

All of the plaintiffs and defendants have ties by blood or marriage to the late J.C. Long, whose real estate empire included the Isle of Palms and numerous subdivisions and commercial properties.

The lawsuit alleged that Darby had tried to “squeeze” the smaller partners out of their ownership stakes in what were called “the Kiawah entities.” The complaint also suggested the minority partners objected to investments Darby was spearheading beyond the island.

Kiawah Partners owns the money-losing Lodge at Doonbeg golf resort on the west coast of Ireland and the proposed 2,500-acre Christophe Harbour development on St. Kitts in the Caribbean.

The lawsuit was settled in December after mediation. While the terms were confidential, it included a buyout clause.

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Long recruited South Street, which was backed in the purchase with money from New York-based hedge fund King Street Capital Management. Negotiations over and after the holidays led to the deal announced Monday. Long will be a senior adviser to the new owners, Melton said.

A spokesman for King Street Capital said the firm had no comment.

Melton is taking over the CEO role that had been held for years by Darby.

“It’s unique for a developer to remain with a project for 25 years, which is why I feel privileged to have been at the helm of a great team leading the strategic development of Kiawah,” Darby said in a letter to property owners Monday.

He also wished South Street “continued success” and urged support for the new owners.

“They are committed to conducting business in the same way that has made Kiawah one of the most successful communities in the world, and have indicated they will continue business as usual,” he wrote.

Darby said he plans to use his experience at Kiawah Partners ”to explore new opportunities.” He did not elaborate.

Long, Darby and Pat McKinney of Kiawah Partners were part of the original group that acquired much of the 10,000-acre oceanfront island in June 1988 for $105 million.

Kiawah’s star quickly climbed, as it became a hugely successful high-end tourist and vacation-home destination. The island got a major publicity boost when The Ocean Course played host to the famous 1991 Ryder Cup. Last year, it was the setting for the 2012 PGA Championship, one of professional golf’s four “majors.”

“We believe it’s a first-in-class asset,” Melton said.

Contact John McDermott at 937-5572.