Marcus and Millichap National Golf Group

Buyer Sentiment

2012-02-16T12:51:00.000-08:00

Investors understand that as a commercial real estate investment, golf competes with all other asset classes for investment dollars. Those who are heavily invested in income-producing properties know that there are plenty of options available for commercial investment. Core assets (Multi-family, Office, Industrial and Retail) are the market trend-setters. Non-core assets, such as golf tend to lag behind their less volatile counterparts. Even as the debt market for traditional income-producing properties began to tighten in 2008, we still saw golf assets trade on multiples of gross income near 2X and cap rates in the single digits in some cases. Currently, traditional commercial real estate core assets are very attractive to investors. Financing is readily available and there is a historically high spread between Treasuries and core asset cap rates. This has put a great deal of downward pressure on non-core assets, especially golf courses. Buyer sentiment is such that a leveraged investment in an income-producing core asset is like a safe layup shot on a tricky par-5. So, what makes an investor want to go for the green in two? The answer is irresistible metrics. In 2011, some courses with negative EBITDA have traded in the 0.5X to 0.7X. For assets with positive EBITDA we saw courses trade in the 1X to 1.5X thus pushing cap rates to numbers well above traditional core real estate returns which has helped stoke velocity in golf transactions. We are beginning to see buyers who are heavily invested in commercial real estate core assets allocating capital for acquisitions in golf. Nearly 50% of the transactions closed by the NGRPG in 2011 involved principles purchasing their first golf assets. Smart money is betting on what it perceives to be purchasing at the bottom of the market with healthy returns from golf properties on a 5 to 7-year holding period. Buyers are taking advantage of opportunities in the golf market where underwriting courses with unleveraged internal rates of return are in the low 20% range. We believe that investors will continue to buy according to the aforementioned metrics for the next 4-8 quarters or until such time as core asset cap rates begin to compress.

CAPITAL MARKETS / COURSE FINANCING

2012-02-03T12:03:00.000-08:00

Like the spring, that is obviously months away, the credit markets continue to show signs of new life forming as the long winter thaws. Banks continue to shed unhealthy assets and warm to the necessity that providing debt is critical to their becoming or remaining profitable. Something they are no longer taking for granted. Trepp reports that banks could be as much as 70% through their loss recognition process on commercial real estate. We see new bank lenders entering the market and rejuvenated bank lenders returning to the market now that the light at the end of the tunnel is clearly daylight and not an oncoming train.

2011 saw the reemergence of CMBS lending in the form of CMBS 2.0, which unfortunately was derailed early in 2011 with a lack of investor appetite for bonds rated below AAA. Currently, the CMBS market appears to be back to where we left off in early 2011 and looks like it could be the darling of the credit market in 2012. That is especially so if you consider the amount of debt maturing this year and the level of debt it will require to renew a significant portion of it. Credit standards for CMBS 2.0 are much more conservative than the original CMBS, especially considering the loss retention aspect, so I do not think we will see CMBS lenders considering “specialty asset types” like golf courses, before filling up enough bonds with their main food groups (multifamily, retail and office buildings).

Life insurance companies expanded their allocations in 2011 and some exceeded their allocations once they realized the high quality of the deals they could do. Life companies hope to lend even more in 2012 than they did last year, but again, they typically limit themselves to trophy properties in large metropolitan markets with low leverage needs.

Improvements in U.S. GDP, employment and consumer confidence will support the notion that 2012 should see more rounds played. In addition, an increase in course sales activity should help stabilize course values, to some degree. These trends should help operators attract lenders to both finance, purchase and refinance transactions. Loan-to-values will remain more conservative than the current favorite, multifamily, but that’s a fact that isn’t likely to change anytime soon. Golf and resort buyers will need to show more liquidity, operational experience and lenders will continue to focus on “global cash flow”. Golf course loan options are improving with local and regional banks as well as credit unions taking up most of the slack. To name a few, PNC and Wells Fargo have recently financed golf assets however, the majority of these loans were credit loans based more on the borrower’s financial strength than the golf asset being purchased. The grass is getting greener on “this side” but we have a ways to go until we can play on it consistently like we used to!

RECENT GOLF COURSE LISTINGS & SALES

2011-11-23T11:01:00.001-08:00

The NationalGolf and Resort Properties Group of Marcus & Millichap is pleased to announce thesale of Hammock Bay Country Club in Naples, FL and Palm Aire Country Club inPompano Beach FL. SteveEkovich, the Director of the National Golf and Resort Properties Group and Chris Karamitsos, the groups'co-founder, represented both the buyers and sellers in the purchase and sale.The two transactions consisted of a total of 72 holes of golf bringing thenumber of courses soldby the group to 21 in the past 14 month.

As golfcourse brokers specializing in an array of golf courses for sale, The National Golf and Resort Properties Group willsoon bring to market multi-course portfolios in Columbus, Oh and Williamsburg,Va. Please visit www.nationalgolfgroup.comfor more information pertaining to these quality golf assets.

FEATURED PROPERTY

2011-11-17T12:59:00.001-08:00

GOLF COURSE FOR SALE

EAGLE RIDGE AT SPRUCE CREEK COUNTRY CLUB

SUMMERFIELD, FL

Priced at $4,200,000, Eagle Ridge buys investors proven cash-flowat a three-year average NOI before management expense of $438,925. The Ocala market is supported by a bustling retirement population with little other than golf to occupy their time. And withapproximately 3,250 houses within this gated, 55+ retirement community servingto fortify customer demand, play has averaged at 117,409 over thelast three years, or nearly 60,000 rounds per 18-hole course. That is significantly higher than the national standard of approximately 32,500 rounds per 18-hole daily fee facility, and suggests thereis ample room to move green fees north of current rates.

Located in Central Florida along the I-75 corridor between Orlando and Gainesville, Ocala is known for its horse farms, small-townfeel and retirement friendly communities. The city is continually ratedas one of America's "Top Five Places to Live" by MoneyMagazine because of its mild three-season climate, beauty, shopping, restaurants, medical facilities, and low crime.

From an investment standpoint, Eagle Ridge offers stabilizedreturn from a proven, cash-flowing golf asset that is turnkey day one of ownership. Previously owned by the developer, a golf-centric ownership group can immediately capitalize on significant upsideto move green fees north of current rates. Course play is protectedby strong local demographics, proximity to the densely populated Villages community, and approximately 3,250 households of 55 and older Spruce Creek residents that play predominantly at their home course, Eagle Ridge. This surrounding strength in housing density from the immediate market area accounted for an outstanding 105,000+ rounds in 2010 from 288 "passholding" members,and $3.4 million in gross revenue. With modest improvements to club operations, this facility has great potential, both immediate andover the long-term, to become one of Ocala's most profitable golf operations.

Contact our golf brokers to learn more about this opportunity as well as other properties available.

Restructuring A Financially Strapped Club

2011-10-25T06:24:00.000-07:00

The Crittenden Golf Conference (formerly the Golf Inc. Conference) is three day event for professionals in the golf industry. This event included 9 hours of educational sessions facilitated by the industry’s leading executives and designed to aid in the growth of your business. We have been a consistent participant in panels and this year the National Golf & Resort Properties Group had both of the founding partners participate, the Director Steve Ekovich was on a panel entitled Restructuring the Cash Strapped Club and Chris Karamitsos was on the panel entitled “Moving the Needle”- Increase Market Share- Improve your Property’s Valuation. On Mr. Ekovich’s panel was an Attorney John Theirl, Partner at Gordon & Rees and Darius Hatami, Managing Director, with HVS Golf Appraisal Services. In the session Restructuring the Cash Strapped Course, we discussed how to handle a course that can’t pay its bills or has debt coming due. Chris Karamtsos’ panel was entitled “Moving the Needle”- Increase Market Share- Improve your Property’s Valuation.

If you are searching for a solution to your problem whether it be for golf course brokers to sell your course, refinance it, someone to bring in equity, or discuss other solutions we can help. Below was an outline of the source of distress, how the distress manifests itself and the five options.

Restructuring a Financially Strapped Club

What Is The Source Of The Distress?

Term On Note Due
Can’t Make Loan Payments
Club Revenue Down
Competition Is Up
Costs Have ↑ & Revenue Neutral
Loosing Members
Weather Event
Poor Course Management

How Does The Distress Manifest Itself?

Can’t Pay Lenders
Can’t Pay Vendors
Poor Maintenance
Loss of Club Activities
Not Paying real estate Taxes
Loosing Good Employees

WhatAre the Options?

Option 1 - Legal – Bankruptcy 7 or 11

How To
Advantages & Disadvantages
- Members
- Public
- Owners

Option 2 - Negotiate With Lender

How To
Advantages & Disadvantages
- Owners

Option 3 - Add Equity

How To
Advantages & Disadvantages
- Members
- Public
- Owners

Option 4 – Refinance

How To
Advantages & Disadvantages
- Owners

Option 5 – Sale

How To
Advantages & Disadvantages
- Members
- Public
- Owners

Case Studies:

Steve asset sale and loan sale
Darius

MARCUS & MILLICHAP BROKERS THE SALE OF PALM DESERT COUNTRY CLUB

2011-09-22T07:19:00.000-07:00

PALM DESERT, CALIF., September 22, 2011– The National Golf & Resort Properties Group of Marcus & Millichap RealEstate Investment Services, the nation’s largest real estate investmentservices firm, has announced the sale of Palm Desert Country Club, a 27-holesemi-private golf facility located in Palm Desert, California, according to StevenEkovich, Director of the National Golf & Resort Group of the firm’s Tampaoffice.

Steven Ekovich, the lead agent on the asset sale and his team of Chris Karamitsos and Matt Putnam, represented the seller, afinancial institution based in California. They also secured the buyer ofthe property, a Canadian investment group. Ekovich said they had about 27 offers on theproperty but deteriorating course conditions and a city agreement with the previousdeveloper discovered during due diligence that was part of a CC&Rs forcedthe new owner to spend almost twice what that course would normally need tospend in maintenance. Ekovich said, “That agreement was so onerous, that oncebuyers really studied the document and met with the city, they decided the riskto proceed was just too high and they dropped out of the process. The buyer webrought to the closing out of Canada, had the expertise to get comfortable withthe agreement, the city and the course conditions”.

Palm Desert Country Club is a 27-hole semi-private golf facility located inRiverside County, California at the heart of the Coachella Valley in sunny PalmDesert. Voted Golf Inc. Magazine's 2006 "Renovation of the Year" after$12.22 million dollars in course and clubhouse improvements, the former Bob Hope Tournament venue subsequentlyfell into disrepair and was foreclosed. Anoriginal Bill Bell design, this course was the centerpiece of a thrivingcommunity 40 years ago during the early boom years of the Palm Springs era. In2004, Cary Bickler, a renowned architect, rehabbed the course includingrebuilding all greens, relocating some of the greens as well as redesigningfairways, tees, bunkers and water features to enhance the golfers’ experience.

# # #

With more than 1,200 investmentprofessionals in offices nationwide, Marcus & Millichap Real EstateInvestment Services is the largest firm specializing in commercial real estateinvestment services in the nation. Marcus & Millichap closed 4,302transactions in 2010, the highest of any commercial real estate brokerage firm.Founded in 1971, the firm has perfected a powerful system for marketingproperties that combines product specialization, local market expertise, theindustry’s most comprehensive research, state-of-the-art technology andrelationships with the largest pool of qualified investors nationally.

www.MarcusMillichap.com

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West Los Angeles· Williamsburg

Ekovich & Karamitsos to be Featured Speakers at September Crittenden Golf Conference

2011-09-02T08:50:00.000-07:00

Steve Ekovich, Director of the National Golf andResort Properties Group of Marcus & Millichap and Chris Karamitsos,the Group’s Co-founder, will be speaking at the Crittenden Golf Conference inPhoenix, AZ, September 25 – 28. Ekovich will be a contributing paneliston the topic, Restructuring The Financially Strapped Club while Karamitsoswill be speaking on the topic, Moving The Needle – Increase Market Shareand Improve Your Property’s Valuation. This will be the third Crittenden Golf Conference in as many years thateither Ekovich or Karamitsos have been either featured speakersor panelists.

For more information regarding the National Golf andResort Group, golf course brokers and golf courses for sale,visit www.nationalgolfgroup.com

NG&RPG Semi-Annual Golf & Resort Investment Report Published

2011-08-31T09:02:00.000-07:00

Summer, 2011 has been a busy one for The National Golfand Resort Group. In addition to putting 12 courses in contract or underLOI, the Group recently published it’s highly acclaimed, Semi-Annual Market Update.The publication, which is available online at www.nationalgolfgroup.com ,provides industry professional with keen insight into topics such as TheEconomy and Golf, Capital Markets/Course Financing, Buyer Sentiment, SalesActivity – Trends & Velocity, Recent Transactions and Revenue and ExpenseTrends.

For more information regarding the National Golf andResort Group, golf course brokers and golf courses for sale,visit www.nationalgolfgroup.com

NGF # Golf Facilities by State

2011-08-26T08:29:00.000-07:00

Are you a Contrarian or a Lemming?

2011-08-18T09:41:00.000-07:00

Okay, we have all heard how golf is dead, the young people won’t play, it takes too long to play a round, customer service is gone, no one has money and hundreds of courses are going to close. Let’s say all that is true. In 20 years golf will still be around, there will be golf courses that make money and we will be looking back on 2010 as the turn around year. Yes there are problems, but is there an industry without them? The auto industry has them, the tech industry has them, the healthcare industry has them, and the manufacturing industry has them. You know what we have that they don’t? A competitive sport that four guys or four gals can play away from the office, away from the kids, way from life’s stresses while enjoying company of friends. How many of us love to play with our friends? Not many of us at 50 years old can play basket ball, football, lacrosse etc., to get our competitive fix, but we can play golf. Our kids will find that out too. The sandwich boomers will find that out and the 79 million baby boomers that are retiring over the next 20 years, already know this. The boomers will figure a way to get back on the course. As the economy begins to recover, boomers will rearrange how they spend money and they will come back. Do we need innovation? Yes. Do we need to close courses? Absolutely. It is good for any industry to close non- performing functionally obsolete stores.

With all this being said, I have a fervarent belief in the resiliency of both our golf industry and the American economy. I visited 16 courses in Maryland, Delaware and Pennsylvania recently. Most all of the courses said rounds were up in 2010. Wasn’t that the worst winter and worst summer on record? The first half of 2011, most clubs we talked to in the mid-Atlantic and South reported memberships are up, play is up and revenue is up. People are coming back to golf. I think it is time to ask if you do believe in golf’s long term viability as a business model or not. If you believe the news papers, the trade rags and industry pundits, you need to be thinking about moving out of the golf business.

So are you a “Contrarian or Lemming? In December of 2000 everyone was telling me their company was going public, they were getting stock options and would be worth millions. The cab driver was telling me to buy CMGI, invest in Yahoo etc. Subsequently, we endured the 2001 stock market melt down. When the cabby and everyone else you know are telling you to get in, you need to sell and get out. In January 2006, the guy behind the counter at Starbucks was telling me how he was flipping houses. Everyone was flipping houses. I have been in real estate for 25 years, and I wasn’t flipping houses, too high risk. In 2007, we all experienced the beginning of the most serious real estate melt down in recent history. How is all this applicable? These were lemmings, which listened to the news, read the newspapers and followed industry pundits blindly and they got slaughtered. “They all fell off the cliff”. Sam Zell, Donald Trump and Berkshire Hathaway sold their real estate in 2005, when everyone else was jumping in. They are three of the most well respected contrarians in real estate and the stock market today. In the recent Golf Inc. publication, the cover page showed Donald Trump’s picture and the caption said” The Most Profitable Man in Golf”. Guess who is buying golf courses?

Years from now, 2011 will be looked at as one of the best markets in history in which to buy a golf course. Some of the courses that will hit the market will be and have been high end courses that would never trade and may not again, until the next major cycle. What that means to a buyer/investor is they can buy a great course; they would otherwise never have an opportunity to acquire, if it wasn’t for this financial crisis. Going-in yields are high, you are buying at well below replacement costs, you are buying on income that is depressed, you are buying in a down cycle, and your leverage, if you can get it, is very low. This is the safest time to buy. If you have access to cash, financing or some kind of capital, you should be buying like crazy.

We recently marketed an asset in Northern California that had 17 offers, a course in southern California that had 24 offers, a course in Maryland that closed with $100K hard at LOI and $1,565,000 hard at signing of the PSA and no contingencies. Our golf courses for sale and recently closed courses are on our website http://www.nationalgolfgroup.com.The skeptics out there would say, well the courses must have been under priced. That would be a valid argument if the professional golf buyers, management companies and major owners did not make offers severely under the listed price on these assets. There are hundreds of buyers for golf courses, people that believe in golf’s future, do you?

As golf course brokers, we are more excited about the future of golf then we ever have been. We have talked to 4-5 new equity funds, in the last six months that want in to golf. We have international buyers that want a piece of our golf market. In the last nine months we have closed 17 golf courses. They range from very high end courses that include master planned communities with excess lots and commercial land to small, one-off daily fee courses. We believe this is just the beginning. We are contrarians, we believe now is the time to double down. Are you a contrarian or a lemming?

WCI Portfolio Closes

2010-09-03T13:39:00.000-07:00

The National Golf and Resort Properties Group of Marcus and Millichap Closes 7 Golf Course Portfolio for WCI. Click Here for story!

Announcing Bid Due Date For WCI 7 Course Portfolio

2010-05-12T15:17:00.001-07:00

There has been significant interest from investors on the WCI portfolio. As a result, please be advised that new and/or revised offers for the WCI Golf Course Portfolio in Sun City Center, FL, are due by May 26th, 2010 at 5:00 PM EST. Highest offer priority will be given to those looking to acquire the entire portfolio, followed by sub-portfolio offers and then individual course offers. WCI is not necessarily basing their decision on price, but surety of close, the ability to execute a transaction and the effect that buyer may have on the community of 12,000 households. For additional information and these golf courses for sale, please visit the listings section of our website at http://www.nationalgolfgroup.com/.

Announcing the Sale of a 36-Hole Semi-Private Country Club in Chicagoland

2010-03-23T07:49:00.000-07:00

This country club is rated as one of the best semi-private golf courses in the state of Indiana. Located in the desirable Chicago MSA and less than an hour from the heart of downtown, this club draws from a population of 7 million people within a 50 mile radius.

This offering features two 18-hole championship golf courses set on 552 acres of woods, prairies, creeks and wetlands. The two courses are broken down into four separate nine's which can be played in any combination. All four nine's have five sets of tees, the longest combination of which measures 7,500 yards and will test the skill level of any golfer. Both courses are comprised of bent grass from tee to green.

The country club offers two full service restaurants and full-service banquet facilities for golf outings, weddings, corporate meetings or any special event. Combine all of this with a qualified, professional staff committed to service and excellence, and you have a premiere golf and country club suitable for the young family, the aspiring business professional or the well-established corporation.

From an investment standpoint, this is a cash-flowing facility with upside in all revenue centers and the potential to trim expenses to bolster the bottom line. In addition, all 552 acres have favorable R-1 zoning already in place, allowing an investor an array of possibilities and exit strategies.

Announcing Sale of Grenelefe Golf and Tennis Resort

2009-12-15T13:39:00.000-08:00

The National Golf and Resort Properties Group of Marcus & Millichap is pleased to announce the exclusive listing of Grenelefe Golf and Tennis Resort in Haines City, FL. Sean Glickman, an associate of Marcus & Millichap’s Orlando office, along with Steven Ekovich and Christopher Karamitsos, co-founders of the firm’s National Golf and Resort Properties Group, will combine forces to market the property. Grenelefe Resort has been brought to the market unpriced and is available for acquisition by market bid.

Grenelefe was a world renowned golf and tennis resort in the 1980’s and 1990’s but, of late, has suffered a series of misfortunes, leaving behind a legacy and with it, a great opportunity for redevelopment. Current ownership acquired the property to convert into a timeshare concept. In 2004, the parts of the resort suffered damage from Hurricane Charley including the conference center, tennis center and guest registration area. Much of this damage has yet to be repaired.

The offering includes 1,273 total acres, three golf courses (one of which is currently closed), 432 rentable/saleable condo units of varying size, a marina tract, a utility plant and 277 developable acres. In addition, this property may qualify for tax benefits associated with a conservation easement that has yet to be filed. Realistically, a savvy investor could market and sell the remaining 432 condo units individually, file for the easement and ultimately recover their entire initial outlay and own the remaining infrastructure free and clear.

This property was just listed on 12/11/2009 and has already spurred a significant amount of interest. There are severable viable concepts to redevelop the property and put Grenelefe back on the map. To view a full offering memorandum for this golf course and other golf courses for sale, please visit www.nationalgolfgroup.com

Steve Ekovich Comments on Golf INC Article

2009-12-07T10:04:00.000-08:00

Golf's Pricing Problem
From Golf INC's Blog
November 5, 2009

"Golfers are playing about as many rounds in 2009 as they did in 2008. In fact, for the first three quarters of the year (January to September), rounds actually are about 0.5 percent higher this year than last, according to Golf Datatech’s National Rounds Played Report.

So why are so many course operators in default on their loans, filing for bankruptcy or just plain struggling to survive? Clearly, flat rounds numbers are not translating into flat revenue performance. The PGA of America’s PerformanceTrak statistics reflect that: Total median revenue per facility for the first nine months shows a drop of 5.1 percent. (Median means there are an equal number of courses with revenue below and above that total.)

A recent survey by the National Golf Foundation offers some clues as to what’s happening. The NGF quizzed 300 golfers about how they’re managing their cost per round given the current economic situation and came up with some conclusions that might help operators understand what’s going on with their customers.

Golfers are employing a variety of strategies to cut their costs: 61 percent are playing during off-peak days and times and 58 percent are playing less expensive courses, the NGF found. And 53 percent have cut food and beverage spending. They’re also walking more instead of paying for golf carts, buying less expensive equipment, tipping less and buying used instead of new golf balls.

We’d like to know if you’re seeing those same trends at your courses. How have playing patterns of your golfers changed over the past year? And how have you adjusted your operations to adapt to those shifting golfing patterns? Have you revamped your rate structure? Or provided added-value incentives for golfers? We would like to hear what you think about these critical issues."

Steven Ekovich Comments:

We are valuing golf courses all over the US and are seeing operating statements from those courses which are producing some trends. The single public golf course owner and equity clubs seem to be the hardest hit. Even though rounds are the same or slightly down, revenues for the single course owners are off 8-15% depending on region. The private equity clubs are off even more, as much as 15-20%. EBITDAs are also off, but for those same golf course owners, EBITDA is off more than revenues. However, this is not as true for the multi-course owners. We talked to a lender that has 60 + courses in their portfolio, with a small number of owners controlling those courses. The collective revenue is off approximately 5 %, yet EBITDA is up approximately 6%. The increase in EBITDA is coming from the economies of scale multiple golf course owners have and their ability to cut costs along with a little help from lower interest rates. The question is, if revenue drops further and most courses have cut as much as they can, where can operators find more expenses to cut? The answer is, they can’t.

One more trend we've noticed is that, the Northeast and Midwest course owners seem to be holding their revenue much better than some of the southern states like Florida, and Arizona.
We are seeing some bright spots in the market. There are exceptional operators and managers that are beating the market. We have a client who hired a GM that has moved the EBITDA for 2009 YTD, $250,000 higher by paying attention to the details, getting his staff to buy into his new initiatives, redesigning their marketing and increasing customer service. In another case, we looked at 6 courses from a national owner with EBITDAs from $250,000-$3,000,000 and their EBITDAs are about even with last year. So there are courses cash flowing nicely, bucking the trends and on solid footing without slashing green fees, cart fees etc. It can be done.

Steven Ekovich is the VP, Director of the National Golf Group, at Marcus & Millichap. We have golf courses for sale nationally, help lenders value their golf course REO, sub and non performing assets as well as help owners find solutions to their financing and strategic ownership needs.

Price Reduction for Private Pinellas County Club

2009-11-09T11:16:00.001-08:00

The National Golf Group of Marcus and Millichap is pleased to announce a price reduction for the Private Country Club in Northern Tampa MSA to $2,900,000!!!

This golf course for sale in Florida is a cash flowing business with a solid membership base, great location and a built in captive audience within a gated community.

Don't miss this fantastic opportunity to become a golf course owner! For more information on this offering, please visit the National Golf Group's website at http://www.nationalgolfgroup.com/ and click on the golf course Listings tab. If you take a moment to register, you will have access to the full offering memorandum for this course and you will also be able to view our other golf courses for sale. Feel free to explore the site more while you are there by reading about our golf course brokers or reading some of the latest research reports about the golf industry in your area.

We look forward to serving you soon!

New Listing For National Golf Group

2009-10-13T07:59:00.000-07:00

Private Country Club in Northern Pinellas County For Sale!!!
East Lake Road

Tarpon Springs, FL 34688

18 Hole Championship Golf and Country Club
Solid Membership Base
Northern Tampa MSA
Within a Gated Community of Million Dollar Homes
Great Reputation in the Local Area
Cash Flowing Facility
Upside Potential in all Revenue Centers

The National Golf & Resort Properties Group of Marcus and Millichap specializes in marketing golf courses for sale - nationwide. Our golf course experts have a combined 43 years of golf and brokerage experience. This, coupled with the most powerful golf course and resort property marketing platform in the nation, provides benefits for both resort and golf course sellers, as well as buyers and investors looking for resort properties or a golf course for sale.

Featured Golf Course For Sale For September 11th

2009-09-11T11:50:00.000-07:00

SunRiver Golf Course For Sale
4210 South Bluegrass Way
St. George, Utah 84790
http://www.nationalgolfgroup.com/
Other Golf Courses For Sale!!

Exceptional Location
Upside in Converting to Semi Private Course
Outstanding Layout
Newly Constructed Nine Holes
Water Source Secure
Excellent Condition
Huge Upside in Management of Expenses
New Irrigation System

For more information on this golf course for sale please visit the National Golf Group Homepage at http://www.nationalgolfgroup.com/. To link directly to the Executive Summary for SunRiver Golf Club, please visit the Golf Course Listings tab and register as an active user. Please also feel free to read the Bio information about our Golf Course Brokers.

The National Golf & Resort Properties Group of Marcus and Millichap specializes in marketing golf courses for sale - nationwide. Our golf course experts have a combined 43 years of golf and brokerage experience. This, coupled with the most powerful golf course and resort property marketing platform in the nation, provides benefits for both resort and golf course sellers, as well as buyers and investors looking for resort properties or a golf course for sale.

Featured Golf Course For Sale For September 3rd

2009-09-03T08:02:00.000-07:00

Sapphire National Golf Club For Sale
50 Slicers Avenue
Sapphire, NC 28744
http://www.nationalgolfgroup.com/
Other Golf Courses For Sale!

INVESTMENT HIGHLIGHTS

Just Completed a $2.8 Million Renovation (Course was closed from 11/07 to 5/08)
Only Development in the Area to Have Such Broad Zoning and Sewer Rights in Place to Support it
Steady Growth Over the Past Twenty Years with Strong Projections for Decades to Come
Low Property Taxes
Atlanta, GA, Charlotte, NC and Knoxville, TN are All Within 150 Miles of the Property
17 Developable Acres included in the list price
2008 Appraisal for Land Alone was $7.8 Million
Approved for up to 659 Units of Mixed-Use Development

Guest Blogger Steve Ekovich: The Ketchup Effect and the Golf Market

2009-08-27T07:29:00.000-07:00

To learn more about Steve, go to this website for Golf Courses For Sale!

For graphs and other information from Real Capital Analytics, visit the National Golf Group Research Weblink!

The commercial loan market has been squeezed like a bottle of Ketchup with a clog at the opening of the bottle. We can see there is Ketchup in the bottle, there are loans that can be made, but the restriction in the end caused by lender uncertainty, government regulation and lack of a secondary market has stemmed the flow of loans to a few drips and drabs. With the $2.2 Trillion of commercial Properties acquired or refinanced from 2004 through today, it is tough to have them refinanced since the reduction in values would cause most owners to come to the table with cash.

Prices of all properties across the board have dropped 37% from the peak. Values for golf courses have dropped even more. Since Revenue is down and expenses are up, it is a double whammy to course owners. All commercial property sales reached only 7% of the volume achieved in the first half of 2007, according to Real Capital Analytics. The volume of all distressed properties has doubled in 2009.

According to the NGF/Allied Golf Associations August Report, a survey of 2,100 golf facility operators showed that rounds fell 2.7 percent nationwide on a same-facility basis in August 2007 vs. August 2006. As a result, the year-to-date total is down 0.8 percent through August. The premium public segment is slightly more positive.

Severe weather in the Midwest was the primary cause for the drop in U.S. rounds. However, five of 11 NGF climate regions were actually up slightly. But the Lower Midwest, the hardest hit region, was down 8.6 percent. South Central region has the poorest performance year-to-date, even though the area had a relatively good August.

There have been 71 closures (in 18-hole equivalents) year-to-date as of June 2009. (There were 106 for the full year 2008.) The leading reasons for 2009 closures have been the economy, lack of financing and over-building followed by conversion to real estate. Closures continue to be disproportionately public, stand-alone 9-hole, short courses (executive and par-3) and value price point. However, in general, the private courses that have been hit with members who have lost jobs, members who move and members who can no longer afford to pay dues, are seeing declining memberships, lower revenue and many are at risk of staying open. There are of course exceptions to this. There are private courses in markets not over saturated with good owners or good boards of directors who are increasing memberships and flourishing. In as much as the real estate business is a local business, golf course ownership is a microcosm of that. We have seen two private courses next to each other where one is bankrupt and the other is flourishing; it comes down to debt structure, customer service, good management, cost containment and reputation.

Closures have far outpaced openings in 2009 - so far only 16.5 courses (in 18-hole equivalents) have opened. As a result, the total net supply of golf facilities is continuing to decrease, from a high of 16,057 in 2004 to 15,931 as of this writing (126 fewer).
For golf course owners, the realities of the fact that the “big three”, Textron, GE and CapMark have exited the airspace, has left a vacuum. When loans come due, lenders have a choice, work with the investor and extend the loan or foreclose. Since there aren’t many lenders out there willing to take out the existing debt, especially when Loan to Values, (LTV’s which are down from 70-75%) are currently in the 50-65%.

For new golf course acquisitions there are a few more options. There is SBA financing, hard money and community banks. If a buyer desires an SBA 504 loan which provides 90% LTV, the debt is structured thusly:

Bank - 1st mtg. (50% of purchase and closing costs) – 25-year term, no balloons. Rate is 450 bps over 5-year treasury (currently 7.16%) and it will adjust every five years at the same index and margin.

SBA - 2nd mtg. (40% of purchase and closing costs)- 20 year term with no balloons. Rate is fixed for twenty years

Hard Money loans are 9.5-12% over Libor or other indexes, typically 3-5 year terms.

Community banks that make loans more on the individual’s net worth rather than the property, are offering loans in the town in which the course resides, at approximately 7.5% interest rate, 20 year amortization and a 5-year term. In addition, these banks want to see a certain level of deposits to be kept on hand by the borrower. That amount is usually in the $250K plus range.

While times are tough and the Ketchup bottle is clogged, we can still squeeze new financing out for the right buyer and the right golf course.

Steven M. Ekovich is the Director of the National Golf & Resort Group of Marcus & Millichap. As director, he is in charge of golf courses for sale, consulting and acquisitions for the firm’s clients. Mr. Ekovich has brokered or overseen as a an executive of the firm over $3 billion in transactions. His partner Chris Karamitsos is a PGA professional who also has brokerage experience and has been in the golf industry for over 20 years. The website for the National Golf Group has information on golf courses for sale, finance, and research that may help the interested reader.

Staying Afloat When the Golf Tide Goes Out

2009-08-14T07:28:00.000-07:00

Owning and operating a golf course in this economic environment poses numerous challenges. Though rounds of golf are holding steady nationwide, there are pockets around the US where rounds are down more than five percent compared to a year ago. The core golfer has cut back his number of rounds in some places by as much as 50%, meaning new consumers must be cultivated. In 2008 owners saw some operational expenses double while their green fees remained the same or lower. In 2007, for the first time, a greater number of courses closed than came on line. So far in 2009, course closings out number openings by more than 3-1. All of this means that now more than ever, in this economy, the golf business is a zero-sum game; if someone is gaining market share, someone else is losing market share. Thus many in the industry fall into the “rate-war” trap. “Low rate is better than no rate” becomes the business model of desperation and only prolongs the inevitable. This does little to attract new business. It simply gives the patron whose business a course has already captured, a lower rate resulting in less revenue at the end of the day. Like any other sector of the market, new consumers are more likely to pay higher prices for goods and services than their seasoned counterparts.

The National Golf Foundation estimates that there are roughly 30 million golfers in the US and approximately 16,000 golf facilities. In Florida alone, there are over 1,400 courses or about 8% of the nation’s supply. That is a supply and demand ratio that tests the creativity and operational skills of all course owners. Yet, in spite of all the negative factors, there are many success stories in the industry. In one sense, this environment provides the most skillful course operators the opportunity to be very successful. With golf courses closing their doors all over the country, those that have the capacity to remain open will reap great benefits provided that their business model is fluid and adaptable to changing conditions in the market.

The successful owners/operators are taking a three-pronged approach to maintaining a fiscally healthy facility. That approach centers around creative marketing, driving value and developing a good reputation while being as frugal as possible. This multi-facetted strategy, when properly employed, should serve to develop new business and keep core patrons from drastically scaling back their rounds.

Effective Marketing
With regard to marketing there are some very effective non-traditional methods that most owners should consider. In this day and age it is imperative for a course to have some sort of web presence and internet campaign to drive new business. According to Matt Kessler of Active Golf, a golf course software and marketing firm, the goal of a marketing campaign is to make potential customers aware of your course then turn him/her into a repeat customer through specialty offers, loyalty programs and maintaining frequent communication with them. He suggests these five keys to a successful web-based campaign: Third-Party Tee Time Marketing, Custom Web Design, Database and Email Marketing, Online Marketing and Yield Management. While the first four are relatively self explanatory, the last of these is particularly innovative. Using golf management software, pro shops can sell excess tee times online, track results and improve yield by choosing to discount distressed tee times (those times that traditionally, for whatever reason, tend to go unsold). Courses have the ability to provide all rate types and booking windows online and integrate online bookings with software which saves staff time on reservations and customer calls. I know of several clients who have over 150,000 golfers in their databases who receive daily specials on available tee times. This generates business and sells tee times that would otherwise go unclaimed.

Be Proactive
Recently I was calling local golf courses for the purpose of doing a comparative rate study. I phoned no fewer than 20 daily fee facilities. When I spoke to the pro shop personnel, they would politely tell me their rates, ask if I had any further questions and essentially end the call as soon as possible. There was however one course I called that was an exception. Once I received all the data I needed the attendant on the phone employed proven sales techniques to sell me one of the available times. He was willing to negotiate the rate over the phone on one of his off-peak times or even throw in a sleeve of balls if I booked a prime time for the next day. It is much more cost effective to include a $5 pack of golf balls than to lower the rate by $10. That is proactive! This is no environment to have mere order-takers answering the phones. Every member of the staff should endeavor to get tee times sold.

Develop and Maintain a Good Reputation
Based on research by the National Golf Foundation (NGF), word of mouth is the top reason that a golfer will try a different course from the one that he most frequently plays. The NGF data shows that a loyal customer will provide a referral impact of more than one additional new customer each year through the positive referral behaviors that loyal customers perform. However, disloyal customers also provide a negative referral impact and may cost up to one customer per year. The NGF estimates that at a typically priced golf course ($45 peak green fee) a positive referral resulting in a new customer can provide approximately an additional $740 of income per player per year. Yet negative referrals can cost $550 per customer per year. This represents an economic factor that due to its intangibility and abstract nature has mostly gone overlooked by today’s golf course operators. Courses that don’t have a quantifiable referral program in place should experiment and track its progress. You might be surprised at the results. After all, customer services is one aspect of which every staff member has direct control.

Driving Value
This falls into the category of subjectivity but there is a basic premise to value. Does the consumer feel as though the return on his investment of time and money to spend the day at the course, was worth the sacrifice of that time and money? If so, what was it? If not, why not? What could the course have provided that would have changed that sentiment? In an industry that relies on repeat business and new consumers, golf facilities can ill-afford for their patrons to experience buyer’s remorse as they slam the drunks of their cars. Evaluate the tangible vs. intangible value-added benefits to playing your course. Some examples of intangible benefits are, superb playing conditions, clean carts, new and clean range balls, hole-location sheets with instructions on how to read them or GPS on carts, daily stimp meter readings, towels in carts, shoe service etc. Adjust your tee sheet to avoid on-course delays so players finish as close to 4 hours as possible. This might mean running ten-minute tee times as opposed to 8-minute tee times, or conduct a first tee/tenth tee start on busy days so more golfers can access peak times. On-course beverage service should be prompt and frequent. Tangible benefits may include a boxed lunch, bounce-back coupons, merchandise discounts or free golf balls.

Do not hesitate to institute late afternoon functions during daylight savings time that include nine holes of golf followed by an organized social gathering. Some of these may sound familiar: Nine & Network, Nine & Dine, Nine & Wine, Ladies Night, Scotch & Cigar Night, Hospitality Appreciation Night, and the list goes on. Football enthusiasts may enjoy Monday Night Tee Off to Kickoff; a nine-hole scramble followed by dinner and watching Monday Night Football. Don’t neglect junior golfers either. Comprehensive junior golf programs in the summer will cultivate future long term patrons and result in increased parent-child rounds in the short term. Remember that when it comes to driving value creativity is your greatest asset.

Though this happens to be one of the most challenging economic environments in decades, sound business practices and thinking outside the box can help you weather the stormy seas.

Chris Karamitsos is a member of the PGA of America and co-founder of the National Golf & Resort Properties Group of Marcus & Millichap Real Estate Investment Service. The National Golf & Resorts property group specializes in Golf Courses for Sale, Nationwide.