TOP SALES OF THE YEAR
ClubCorp went for a staggering amount in 2017, overshadowing what was a relatively lackluster period for course transactions.
The biggest sale of the year in golf? Hmm . . . That’s a tough one. Let’s see, let’s see, let’s see …Oh, how about this one? Apollo Global Management paid $1.1 billion for ClubCorp, meaning that more than 200 private clubs changed hands in a single transaction.
In the golf industry, the sale was applauded because it indicates that a shrewd, powerful private equity firm has enough faith in the game to make a major investment in it. Indeed, headlines such as this sang out: “Apollo Bets on Golf Revival with ClubCorp Buy.” Fortune magazine said Apollo “is betting on the favorite sport of
President Donald Trump actually hacking its way out of the bunker.” Experts such as Steve Ekovich, national managing director of Marcus & Millichap’s Leisure Investment Properties Group, believe Apollo will stay the course with ClubCorp. “It’ll be business as usual,” Ekovich said. “Apollo has really, really smart guys. ClubCorp will continue to grow. “However, Ekovich isn’t quite as optimistic about the overall sales picture for golf courses. For the first time in years, he noted, sale prices for golf courses dropped. During the first six months of 2017, the average sale price fell by 34 percent, while the median price dropped by 24 percent.
There are a number of reasons for the sluggishness. For one, Ekovich said, fewer distressed properties are available, so finding enticing deals is becoming more difficult. Also, revenue at golf courses has been flat because the industry is still overbuilt, and owners can’t raise greens fees without losing customers to other courses, he said.
Currently, there are three types of U.S. course owners, Ekovich said. The first group consists of owners who figure they’ve weathered the worst of the economic storm brought about by the Great Recession and see no reason to sell. The second group consists of those who won’t sell until golf course values climb.
The third group Ekovich calls “lottery players. “They are hoping to sell their properties way above value to developers who want to convert them to other uses, such as housing, which is in demand in many parts of the nation.
Ekovich calls them lottery players because it takes a lot of luck to pull off such deals. Community protests could erupt over loss of green space. Zoning may be an issue. Environmental concerns triggered by chemicals used on courses could derail any kind of conversion.
“Very few can do this,” Ekovich said. He also notes that the pool of buyers is shrinking, with just one large buyer — ClubCorp — and a few boutique firms. However, even with all that said, there continued to be movement in the industry in 2017.
Here are 10 big-ticket deals that stood out. ClubCorp went for a staggering amount in 2017, overshadowing what was a relatively lackluster period for course transactions.
Buyer: Apollo Global Management
Price: $1.1 billion, plus $1.1 billion inassumed debt. As noted, this was the biggest deal of the year— easily. Jeff Woolson, managing director ofCBRE’s Golf & Resort Properties, said it was
the biggest deal “EVER!”
The $1.1 billion purchase price is a bit misleading, however, because it was actually significantly more. Apollo also assumed ClubCorp’s debt, which was another $1.1 billion. So in reality, the deal was $2.2 billion. Dallas-based ClubCorp was founded in 1957 and went public in 2013. Part of its business model in recent years has been to buy clubs and renovate them into more family friendly
enterprises to attract a wider variety of members. It has more than 430,000 of them. However, the company had been struggling, particularly when it came to its debt load and its falling stock price. It seemed as if the time was ripe for a change. Apparently, it was.
Accordia Golf Co.
Buyer: MBK Partners
Seller: Accordia Golf Co.
Price: $760 million
It wasn’t just the U.S. golf market that saw a mega-deal. In Japan, Accordia Golf was sold to MBK Partners, a South Korean private equity company.
Accordia owns and/or manages about 135 golf courses. It was created by Goldman Sachs to scoop up distressed golf courses following Japan’s bad economic run in the late 1990s. Is the purchase a gamble for MBK Partners? Golf in Japan is facing the same pressure that it faces in the U.S.: Longtime customers are getting older, and younger people are not picking up the game in the same numbers. But since both ClubCorp and Accordia were scooped up, it would appear that golf is still a worthy bet.
- Lansdowne Resort and Spa
Seller: LaSalle Hotel Properties
Buyer: Dejia of Hong Kong
Broker: JLL, seller representative
Price: $133 million
Yes, the Lansdowne Resort in Leesburg, Va., has golf — 45 holes, to be exact. But it offers much more that that. It has nearly 300 hotel rooms, four restaurants, meeting space, tennis courts, pools and a fitness center. Then there’s this thing called location, which real estate people always harp about — and for good reason. Lansdowne sits on nearly 500 acres overlooking the Potomac River near our nation’s capital. Ci Zhonghua of Hong Kong owns the company that made the purchase. It is said to be his first such buy in the U.S. “Investors are paying more attention to assets in the Washington, D.C., metro area due to improving market fundamentals,” JLL Managing Director Robert Webster said at the time of the sale. “The size of this resort, along with the luxurious amenities it offers guests, presented a valuable opportunity to own an iconic property in a spectacular location.”
- Carton House Hotel, Golf & Leisure Resort
Buyer: Mullen Real Estate
Seller: Carton Development Partners
Broker: CBRE, seller representative
Price: $65 million
Carton House is Ireland’s golf central. It’s the home of the Golfing Union of Ireland — the oldest national golfing union in the world and the Irish equivalent of the PGA. You can also play a little golf here, and on some pretty-well-regarded courses. The property has two championship tracks, one designed by Colin Montgomerie, the other by Mark O’Meara. Both are considered to be among Ireland’s top 50. Located near Dublin, the resort includes a 165-room hotel that features 18 suites in the original house that dates back to the 19th century. Carton House was purchased by John Mullen, an Irish-American who — big shock— has big bucks. He’s the founder and chairman of Apple Leisure Group, one of the largest vacation companies and tour operators in North America.
Real Club Valderrama
Seller: Valderrama SA
Buyer: Club members
Price $33 million
Real Club Valderrama is another European gem that changed hands. And it was kind of an unusual transaction. It was purchased by Valderrama’s members, who had long coveted the prestigious club in Sotogrande, Spain. In the U.S., lots of private clubs are facing challenges, and their members are looking for buyers. Here, it was the opposite. The members had leased the property for three decades. Now, they have the title to the swanky place on the Mediterranean coast. The club’s course dates back to 1974, but Robert Trent Jones was hired in 1984 to do a makeover when new owner Jaime Ortiz- Patino rebranded the venue then known as Sotogrande New. Under Patino’s leadership, Valderrama put Costa del Sol on the world golf map and the course hosted numerous high prestige events, including the 1977 Ryder Cup. The club recently completed a $6 million, five-year renovation.
- Kingsmill Resort
Buyer: Escalante Golf
Seller: Xanterra Parks & Resorts
Broker: CBRE, seller representative
Price: $30.7 million
Escalante Golf is one of those boutique firms that Ekovich mentioned earlier. Such companies don’t gobble up a ton of courses, but their strategic buys do begin to add up. Texas based Escalante Golf now owns more than a dozen properties. It seeks top-end courses, and Kingsmill, located in Williamsburg, Va.,fits the bill. Kingsmill was founded more than 45 years ago by Anheuser-Busch. “It is truly a special place with a revered history,” said David McDonald, president of Escalante Golf, at the time of the sale. Escalante tried to buy Kingsmill in 2010, when the beer giant first put it up for sale, but it was outbid by Colorado-based Xanterra Parks & Resorts, which manages many national and state parks. CBRE’s Woolson, who represented Xanterra, said it now wants to focus more on its core business. Xanterra’s parent company is The Anschutz Corp., headed by sports and entertainment mogul Philip Anschutz. Kingsmill has three championship golf courses: the River Course, designed by Pete Dye; the Plantation Course, designed by Arnold Palmer and Ed Seay; and the members- only Woods Course, designed by Curtis Strange and Tom Clark. Kingsmill Resort also offers nearly 425 hotel rooms, six restaurants, a spa and fitness center, a marina and 15 tennis courts.
- Ocean Breeze Golf Course
Buyer: Greater Boca Raton Beach &
Seller: Wells Fargo
Price: $24 million
The city of Boca Raton, Fla., is wheeling and dealing in golf. It’s buying one course while selling another. And they are anything but insignificant deals. Boca Raton has all but completed the purchase of Ocean Breeze Golf Course, which had been closed for more than a year because of declining use. Nearby residents were bummed because a shuttered golf course is not the best neighbor. The city is lending money to the Greater Boca Raton Beach & Park District, which plans to revitalize Ocean Breeze’s 27-hole golf complex and create what will be called Boca Raton National Golf Club. In addition to attracting local players, the city hopes it will be used by area college golf teams as a practice facility. A developer would have needed local residents’ approval to build on the site, and the idea of anything but a golf course was not being accepted too keenly. Meanwhile, the city has agreed to sell its Boca Raton Municipal Golf Course to GL Homes for $65 million. The buyer has 18 months to complete the deal.
- Las Vegas Country Club
Buyer: Samick Music Corp.
Seller: Las Vegas Country Club
Broker: CBRE, seller representative
Price estimate: more than $20 million
Frank Sinatra played here. So did other members of the Rat Pack, such as Dean Martin. Big-shot politicians have been members. So were mobsters. Elvis? Of course he stopped by. Founded in 1967 as Las Vegas International Country Club, the private club has been on the market for more than a year. Its membership was aging, and capital improvements were necessary. A deal with an earlier buyer fell through, but this one is expected to close soon, Woolson said. Samick, a Korean company, owns Redhawk Golf Course in Temecula, CA. There’s some room for additional development at the Las Vegas club, but the golf course can’t be touched because it’s protected by deed restrictions. It’s one of the last remaining layouts near the famed Las Vegas Strip.
Plantation on Crystal River
Seller: Scout Hotel and Resort Management
Buyer: Kingwood International Resorts
Brokers: Hilda Allen Real Estate, buyer representative; CBRE, seller representative.
Price: $15.5 million
Talk about options. At the Plantation on Crystal River in Crystal River, Fla., you can play golf as well as swim with endangered West Indian manatees. Indeed, it’s the only place in the U.S. where you can do that. About an hour’s drive from Tampa, the resort is rather isolated, but its secluded location is part of its charm. According to reports, multiple offers were made on the resort, which has 27 holes of golf. Kingwood International plans to invest more than $2 million in upgrades to the resort, which dates back to 1962. Kingwood also owns the Kingwood Golf Country Club & Resort in Clayton, Ga., and the Achasta golf community in Dahlonega, Ga.
- Dismal River Club
Buyer: investment group headed by Joel Jacobs
Seller: Richard and Chris Johnston
Broker: Marcus & Millichap, buyer and seller representative
Price: $5.2 million
What makes this sale so noteworthy is that it shows continued hope for Dismal River, located in Nebraska’s remote Sand Hills. This is the fourth ownership change since the course opened in 2006. People just can’t seem to give up on the promise of a club in such a beautiful, rugged locale. Although as much as $40 million has been invested in the two courses at Dismal River, the golfing enterprise has apparently performed up to its name: Dismally. It’s a little odd, considering the names behind the design. The initial course was designed by Jack Nicklaus, the second one by Tom Doak. What could go wrong? While the club is isolated, it’s in the same vicinity as Sand Hills Golf Club, which boasts one of the nation’s top courses. However, the timing was bad; it was built right before the economy tanked, when the golf business began a major swoon. The new owners, led by Joel Jacobs, who grew up in the area and is a former pro football player, hope to market the course more aggressively and reach out to a larger playing audience. They also are offering new activities, such as hunting, shooting contests and other outdoor adventures. There’s a lot of room to play, what with the facility having 3,000 acres. Ekovich, who represented both the buyer and the seller, described the sale as one of the bigger deals of the year involving a golf property that’s not being converted to other uses. He also thinks the new formula will be successful. “It’s going to be world-class,” he said.Kingwood International plans to invest more than $2 million in upgrades to the resort, which dates back to 1962. Kingwood also owns the Kingwood Golf Country Club & Resort in Clayton, Ga., and the Achasta golf community in Dahlonega, Ga.
BY MIKE STETZ
CLUBCORP’S TPC MICHIGAN
O F T H E Y E A R
28 Golf Inc. January/February 2018