The Pellucid Perspective - February 2022 - 10

COMINGS
& GOINGS
Redevelopments Gaining Ground On Transactions
A
ctivities in January continue the leveling off pattern of between
10-15/month across the public domain sources we
monitor for this column. The monthly tally was 7 Transactions
(continuing golf operations)/Sales followed by 5 " take outs "
(Closures and Redevelopments) and 2 reconfigurations for our
monthly total of 14. For our dedicated readers, the below table
provides the details; for our " skimmers " , here are the highlights.
The redevelopments marked a resurgence of hefty premiums
for golf courses to be repurposed for both commercial and
residential real estate. In a breathtaking transaction, the Boca
Raton Municipal GC was transacted for nearly $66M; while
there were several components of what appeared to be a multifaceted
transaction involving the land, re-selling, re-zoning
etc. that's an eye-popping sum for a 27 hole course and the
exception to municipalities not parting with their greenspace
very easily, even if it doesn't makes sense as an ongoing golf
operation. This has got to be a textbook example of " highest
and best use " and, by a far margin, that wasn't as a golf course.
Part of what we're seeing here is the incredible pressure on
housing stock and affordability which is pushing land values
up to levels where even the " greens " are shaking their heads.
In the Transactions column, we're seeing a trend of corporate
buyers for Private clubs. This month ClubCorp purchased
two courses they've managed for years, one on Long Island
(future intent to purchase) which potentially has a reconfiguGolf's
landscape changes
Event
Course
Hickory VFW
Golf Course
Closed
DMA
ration of the private club to better accommodate residential
development on current fringe and future " liberated " land.
Concert Golf also continues to buy courses with their buy/
invest/improve/profit business plan to be proven at some point
in the future (the profit part). There are also a couple successful
" flips " this month, a noteworthy one in the Cleveland area
where Medinah Thrive Golf LLC bought Medina CC out
of foreclosure in '20 for $2.3M and sold it in recent months
for $3.5M to a local corporate executive. Like many other
speculative pursuits, flipping golf would seem to be high-risk,
high-reward at this point as quite a few buyers have discovered
when they couldn't develop or re-sell the course due to
local citizens protests and/or the municipal leaders not allowing
rezoning or imposing other double-secret codicils in land
oversight.
As we stated in the State of the Industry, in the absolute
the level of transactions across the 14K US facilities is tiny
(~2%/yr combining sales, closures, openings and reconfigurations)
and we still haven't seen a widespread uptick in the
valuations which would likely jumpstart the transactions by
bringing more (reasonable) sellers to the market. If the COVIdend
starts giving back gains in golfers and rounds in '22
and beyond that may change but, at current levels of supply &
demand, quite a few owner/operators seem willing to see more
of the cards before deciding to hold 'em or fold 'em.
Type/Holes Summary
Youngstown OH Pub/18
Has been rumored as development candidate for
months but 1/12 Facebook post made at least
the closure official. Odds-on bet however is if you
close it abruptly with no apparent plan, there's
probably a " done deal " in some fashion (and it
ain't a re-opening as a golf course...)
Winter Pines
Golf Club
Orlando-Daytona
Beach-Melbourne
FL
Transacted/
For Sale
The Currituck
Club
Engineers
Country Club
Norfolk-Portsmouth-Newport
News
VA
New York NY
Pub/18
City of Winter Park buys 2nd course (also owns
9 hole Winter Park 9) to protect greenspace and
try not to lose money (much easier post-COVID).
Price of $7.4M is rich (est. 4.8x revenue, wow!)
but affluent people can afford more to protect
land vs. market-value or highest-and-best use
Pub/18
Priv/18
Bought by ClubCorp which has managed it for ~20
yrs; planned $850K in upgrades (not lavish, but
not small) and " they now own the keys " . Several
of these rent-then-buy moves by Ccorp...
Interesting deal with RXR (developer/financer)
and ClubCorp. RXR previously bought and has
invested in ongoing golf. Now wants to subdivide
the property to develop 92 condos to co-exist
on the Long Island footprint. After development
ClubCorp will purchase golf asset and RXR will
exit. Will it work?
10 The Pellucid PersPecTive
February 2022
The Pellucid Perspective - February 2022

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