💼 Disney + Regal Estate

briefcase | invest smarter | Issue #124

Happy Coronation Day to all! King Charles III will be crowned King of England and 14 other Commonwealth realms (including Canada!).

Briefcase’s Chief Economist Bae Bean had this to say about the auspicious occasion: “A Coronation? In this economy?”

Also, we couldn’t find a royalty-free stock photo for this issue.

And, happy Cinco de Mayo!

Can’t wait to meet our favorite Disney princess, Tacobella.

🤴🏽 Disney + DeSantis = Drama King

We know what you’re thinking, what the fort does King Charles and his Coronotation today have to do with real estate? Well, add a little pixie dust and a dash of the sunshine state, and you’ve got yourself a fairytale fit for real estate watchers.

Plot: Disney angers the head cheese in Florida, who fights back, but may have bit off more than he can chew, and it all revolves around 25,000 acres of prime Flordia real estate. Oh, and there’s some royalty involved…duh…it’s Disney.

📽️Briefcase is proud to present…

Scion King: The DeSantis-Disney Real Estate Joust

Don’t know what scion means? Go look it up, we’ll wait, it’ll make sense later.

Also, we’re not great at titles, we asked that the sequel to Frozen be called 2 Frozen 2 Flurrious. Your loss Disney.

OK, let’s get to the show. Spoiler alert, Disney finds a way to kill the main character’s parents.

🍿 Let’s Catch You Up

The Reedy Creek special tax district was formed in the 1960s and comprises 25,000 acres, home to Disney’s various parks and hotels. It’s the crown jewel of Disney assets, because Disney is the defacto governor of this land. But more on that later.
Last March, Disney said that Florida Gov. Ron DeSantis' Florida bill HB 1557 on sex education (aka Don’t Say Gay law) "should never have passed and should never have been signed into law."
DeSantis went full Malificent and told Disney their days of preferential treatment as a special tax district were over. The Governor couldn’t completely disband the tax district because it had over $1B in debt, which would have to be redistributed to other districts in the area. This would anger a lot of DeSantis’ constituents.
So instead, DeSantis took control over the appointments of the Reedy Creek board in February, saying “[t]he corporate kingdom finally comes to an end. There's a new sheriff in town, and accountability will be the order of the day." Meow.
Fun fact: One of DeSantis’ new panel appointees is Pastor Ron Peri, who previously suggested that “tap water could be making more people gay.”
Not to be outmaneuvered, before the new board took the throne of Reedy Creek, the old board and Disney agreed to new rules.
What new rules? Disney and the panel signed a long-lasting development agreement that drastically limits the control of the new board and moves powers over to Disney.
CNBC states, “As part of a 30-year development agreement, Disney no longer needs board approval to build high-density projects or buildings of any height and can sell or assign development rights. It also bans the board from using Disney’s name or any of its characters.”
Per Bloomberg, “The last-minute changes restrict the powers of the new board members for decades, including their ability to review theme-park expansions and billboard advertising.”
And what about Royalty? And in a final blow that would make even Jafar blush, Disney added a timeframe to this new agreement: “…this declaration shall continue in effect until twenty one (21) years after the death of the last survivor of the descendants of King Charles III, King of England, living as of the date of this Declaration.”
This essentially makes Disney the new governor of Reedy Creek. Queue the…

Well played Disney…But the genie isn’t back in the bottle yet, DeSantis responded to the move by saying he will seek legal remedies to nullify these agreements.

Alright, all caught up? And all this following Megxit. The Royal Family really didn’t need more drama. But that’s precisely what they got when Florida Governor Ron DeSantis and Disney picked a fight.

Who will win? Well, we asked you, loyal briefcase reader, for your input on the ending to this (not-so) fairytale.

Disney’s Crown Jewels

Reedy Creek, the 25,000 acres at the center of the Scion King plot, is an interesting case study for real estate investors. Through a panel of 5 members appointed by Disney, the company essentially acts as its own county. This means…

⚡ Adding and approving its own roads and utilities.
🏗️ Building whatever it wants, wherever it wants.
👩‍🚒 Have its own fire department.
🎢 Build a rollercoaster without government approvals.

And more. This special designation allowed Disney to run its own show and not face the regulatory, zoning, and bureaucratic hurdles most developers and companies face.

🤔 Imagine never having to apply for permits, rezoning, or paying ridiculous development fees. That’s what Disney has enjoyed since the 1960s.

But unfortunately for Disney, tudors down is a furious DeSantis, who now has the authority to appoint the panel of 5 overseeing the Reedy Creek tax district.

This is why Disney snuck in the new development agreement at the last hour. These new agreements stripped the new panel members of their powers and transferred most of the previously enjoyed tax district benefits to Disney.

DeSantisland or wRong DeSantis: A Happy Ending?

Our guess is that at the end of this fairytale, we’ll find out DeSantis was Gaston all along.

Two weeks ago, Disney filed a lawsuit against DeSantis and the new Reedy Creek board members over what the company alleges was "patently retaliatory, patently anti-business, and patently unconstitutional."

When will this end? It’s likely to be a drawn-out affair, especially since we have to wait 21 years after the death of the last survivor of the descendants of King Charles III. Geesh.

We say…Just give DeSantis a guest role on Mandelorian and move on, that’s all he really wants.

So What? Companies that bring jobs and development to a region can ask for serious concessions from local governments. Disney is a prime example of that.

Florida’s business-friendly image has been damaged by the DeSantis-Disney dust-up. That said, it’s unlikely this will be solved soon as it’s dragged through the courts. But, it makes for a great story!

Weekly Real Estate News

🚨 Turbo Lever Off: Fed raises 25 bps and signals a slowdown in rate hikes — Inman

💎 Diamonds For All: Luxury property market experiences significant recovery in the first quarter of 202 — Financial Times

🤑 Sidelines: Institutional investors remain cautious about real estate investments, waiting for more favorable prices — Wealth Management

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Real Estate and the Disney-DeSantis Joust