Golf Course Sale with $49M in Liabilities
Marriott, owner of the Ritz-Carlton, was in the process of interviewing golf brokers to select the group to represent them in a sale. LIPG prepared a strategic analysis of the course, and strategies for Marriott’s exit that centered on pricing and a solution to the $49M in refundable initiation fees. Initially, Marriott was offering to keep $29M of liabilities and would give the club to the members, but the members would then have to assume the remaining liability of $20M. There is very little that the LIPG golf advisors have not seen, and that includes situations where refundable initiation fees can be a potential obstacle to closing a deal.
After the round of interviews, it became apparent that LIPG competition advised that a sale was not possible because of the liabilities. Fully understanding the situation and having sold properties with similar arrangements, LIPG informed Marriott that the marketing process and strategy to be executed on market would not only alleviate Marriott of the $49M in liabilities, but transact the property for a price in addtiion to the $49M.
After an exhaustive national and international marketing effort, the LIPG presented seven competing offers, each at list price or over list. Upon consultation with LIPG, Marriott determined that Trump Golf would be the best fit for the seller and club members for three reasons: 1) they would assume the $49M in liabilities; 2) they would pay the list price for the property; and 3) they had the resources to indemnify Marriott from any further liabilities.
The Ritz-Carlton sale is another example of how expert knowledge and experience in the industry brings a comprehensive tools to an owner’s situation. Without the knowledge or experience of the LIPG, it is very likely that Marriott would have assumed to be “stuck” with the asset, or been on the hook for some portion of the liabilities. In addition, the LIPG marketing process procured offers from buyers all around the country, while also engaging international investors with an interest in Florida golf. The deal making process was very complex as a result of the golf course and residential elements being intertwined from both service and maintenance standpoints within the resort operations, but the end result was a win for both seller and buyer.