The Pellucid Perspective - September 2013 - (Page 2)

GOLF COURSE TRANSACTIONS Fortress Investments to buy American Golf Corporation Current lender to buy out Goldman Sachs, Starwood Capital By Jim Dunlap O ne of golf ’s largest portfolios is expected to change hands soon, with the acquisition of Santa Monica, Calif.-based American Golf Corporation by multi- tiered investment giant Fortress Investments. American Golf, which was purchased by an investor group headed by Goldman Sachs and Starwood Capital from publicly traded REIT National Golf Properties in early 2003 for $1.1 billion, currently owns or leases just under 100 golf course properties, primarily concentrated in California, New York and several other key markets in the U.S. While the deal has not closed yet, reliable industry sources have confirmed that Fortress will take the reins at American Golf in the near future. Te current AGC management team, headed by CEO Paul Major and Chief Operations Officer Keith Brown, is expected to remain at the company’s helm. Te AGC acquisition is Fortress Investments’ largest foray into the golf industry, but not its first. Earlier this year, Fortress signed on as the financial backer for a new company formed by former Club Corp and Pegasus Golf executive Blake Walker, Arcis Equity, which recently acquired several of the Brightstar Golf Group portfolio of courses. Fortress has also been involved with American Golf for some time as a mezzanine lender for the company’s debt. Fortress had also been mentioned as a possible suitor for AGC prior to the company’s purchase by Goldman Sachs and Starwood Capital. At the time of its purchase by Goldman Sachs and Star- wood, American Golf was the world’s largest owner/operator of golf course properties, with approximately 250 courses owned or leased worldwide. Over the past decade, the company has gradually pared its portfolio, selling its courses in the U.K., a portfolio of nearly 30 courses to CNL, and either declining to renew leases or selling properties outside of its target markets. Te company’s current courses, approximately 30 percent of which are AGC-owned and the rest primarily leased, are heavily concentrated in California by design, in addition to a long term contract for operation of a number of New York City area publicly owned courses. While Goldman Sachs and Starwood Capital paid a hefty price for the AGC portfolio in 2003, knowledgeable industry observers have expressed confidence that those investors have more than recouped their investment, through a combination of astute debt refinance and other financial strategies, the sell-off of under-performing or geographically undesirable properties, a tight rein on expenses and implementation of efficient operating and marketing strategies. Teir decision to sell to Fortress at this point is being viewed as a desire by the current owners to redeploy their AGC capital in other areas. No price has been announced for the Fortress acquisition, but it will likely be the largest golf industry transaction since the 2006 sale of Club Corp to KSL Capital Partners for a reported $1.8 billion. Arcis Equity purchases Brightstar Golf Group courses In July of this year, newly formed Arcis Equity purchased three of Brightstar Golf Group’s remaining four courses for an undisclosed amount. Te three courses bought by Arcis were TPC Snoqualmie Ridge east of Seattle, Wash., and two courses in the Parker, Colo. area, Te Pinery Country Club and Te Club at Pradera. Te Snoqualmie property is the only TPC facility in the state of Washington, and hosts an annual PGA Champions Tour event. Te sale of the three properties leaves Brightstar with one remaining property, Te Golf Club at Redlands Mesa near Grand Junction, Colo. In March of 2012, Brightstar sold Whitney Oaks, north of Sacramento, to the United Auburn Indian Community, owners of nearby Tunder Valley Casino, for a reported $3.95 million. CBRE Golf & Resort Properties of Carlsbad, Calif. listed and sold the properties on Brightstar’s behalf. n While the deal has not closed yet, reliable industry sources have confirmed that Fortress will take the reins at American Golf in the near future. The current AGC management team, headed by CEO Paul Major and Chief Operations Officer Keith Brown, is expected to remain at the company’s helm. 2 THE PELLUCID PERSPECTIVE SEPTEMBER 2013

Table of Contents for the Digital Edition of The Pellucid Perspective - September 2013

The Pellucid Perspective - September 2013
Contents
Golf industry supply contraction: Not if but how long?
Water “Whoas”
Pricing and Yield Management Can you discount your way to prosperity?
The Dude and Jeff Spicoli Go Golfing
PGA Junior League Golf takes a step forward in 2013
August golf weather impact: Continuing positive; better late than never
Phoenix courses not desert-ed
Sequoia Golf acquires 3 former Heritage courses in Atlanta market, leases California course
Watershed moments for U.S. golf

The Pellucid Perspective - September 2013