THERE GOES THE CEO NEIGHBORHOOD
By ANDREW E. SERWER

(FORTUNE Magazine) – Ford, Mellon, Vanderbilt, Whitney-the names in Florida's Jupiter Island Club directory have a familiar ring. There are even scores of new-money power brokers, such as Louis Gerstner, CEO of IBM, and Rawleigh Warner, ex-CEO of Mobil. The swells are steaming because a controlling interest in this toniest of clubs, as well as hundreds of surrounding acres, may be sold to developers. ("Hortense, hide the silver!")

At stake is the stylish hibernation of some 300 patrician families who've clustered on this barrier island 40 miles north of Palm Beach. The colony was founded in the early 1930s by Connecticut's Joseph and Permelia Reed (mining), who wanted an understated getaway for the old-money set. Some club rules: "Membership criteria will include, but will not be limited to, character, general and social reputation, personal characteristics, compatibility with other Members, and reputation in business and financial dealings." Read between those lines.

Since the Fifties, the Reeds have owned 60% of the club; members controlled the rest. For decades life at Hobe Sound, as it is called, has been blissfully private. But the tranquillity broke last year when Mrs. Reed died, leaving her heirs land rich and cash, well, less rich.

The Reeds offered to sell the 60% stake for $60 million, giving the families full ownership of the 220-acre club with its 18-hole golf course, inn, marina, beach club, 14 tennis courts, and outbuildings. There are also 400 acres of developable land, plus a water company that supplies the island. "The water company alone is worth at least $25 million," says John Bralower, managing director at Sonnenblick-Goldman, which is handling the sale.

The clubbies, who have right of first refusal, balked at the price. The rich are different; they know how to bargain. But they had better act fast. A group of buyers represented by Miami attorney George Allen made a $50 million offer. These interlopers may open up the club to the masses or, God forbid, build condos.

The families have until July to match the offer or else lose the aquifer, the acreage, and perhaps their way of life. The club members might match the $50 million bid. Or they might work out a deal where they would buy just the club, or they might end up negotiating a new deal with the Reeds. Look for them to somehow step up and preserve their preserve. -

-- ANDREW E. SERWER