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Joel_Stewart

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Nat. Golf & American Golf Sold to Goldman Sachs
« on: September 16, 2002, 07:47:12 PM »

This is the follow up and culmination of another post a few days ago.  


SANTA MONICA, Calif., Sept. 16 /PRNewswire-FirstCall/ -- National Golf Properties (NYSE:TEE) ("National Golf"), a real estate investment trust, today announced that its Board of Directors and its Independent Committee have approved the sale of the company to an investor group comprised of Goldman Sachs' GS Capital Partners 2000, L.P., ("GS Capital Partners"), Goldman Sachs' Whitehall Street Real Estate Fund 2001 ("Whitehall") and Starwood Capital Group's SOF VI U.S. Holdings, LLC ("Starwood Capital"). GS Capital Partners, Whitehall, and Starwood Capital announced that, in conjunction with the transaction, they will also purchase the outstanding equity interests of American Golf Corporation ("American Golf"), a privately-held company that leases and operates nearly all of National Golf's properties, and certain of its affiliates. The combined transaction is valued at $1.1 billion and includes full repayment of all existing National Golf and American Golf indebtedness. The transaction is expected to close in early 2003, subject to customary closing conditions including shareholder and regulatory approvals. Under the agreement, National Golf shareholders and common unit holders will receive $12.00 per share in cash or per unit, less any dividends or distributions paid prior to the closing of the transaction.

The companies will continue to own, lease or manage over 250 municipal, daily fee, resort and private golf courses and clubs, with more than 50,000 members, primarily in the United States as well as in the United Kingdom, Australia, and Japan. The companies will maintain a strong presence in highly desirable golf markets including Southern California, the San Francisco Bay area, New York City, Atlanta, Hilton Head Island, Chicago, and Las Vegas.

"The Independent Committee is pleased to recommend this transaction to NGP's public shareholders. We believe we have maximized shareholder value by conducting a thorough analysis of strategic alternatives and running a competitive process," said Charles S. Paul, Chairman of the Independent Committee and Interim Chief Executive Officer of National Golf.

"We are pleased to be buying the world's largest owner and operator of golf courses," said Henry Cornell, Managing Director of Goldman Sachs. "This acquisition is consistent with our strategy of investing in companies with leading industry positions. We look forward to working with the company's management team to continue to grow the extraordinary platform they have created."

Merrick Kleeman, Senior Managing Director of Starwood Capital Group, added, "Given our history of investing in and building golf and leisure related businesses, this acquisition is a compelling opportunity. The company has assembled an unparalleled collection of assets and a talented and dedicated team that we believe is well positioned to lead this industry into the future."

"We are very enthusiastic about this transaction and the quality of our new partners," said David Pillsbury, President of American Golf. "Goldman Sachs' and Starwood Capital's financial strength, proven management expertise and broad range of resources will be invaluable to our company and the properties we operate. We are confident that these strengths, coupled with our team of highly experienced people and our diverse property portfolio, will enable us to build a truly world-class organization."

David Price, Founder of both American Golf and National Golf, commented, "This is an exciting and important next step in the evolution of the companies. I'm thrilled about all we have accomplished and look forward to many great opportunities ahead."

After the transaction is completed, Mr. Price will become Chairman Emeritus and, along with other owners of American Golf and the related entities that are being acquired, will receive for their interests in American Golf and these entities total consideration of $10,000 in cash, two percent of the equity in National Golf and an option to acquire two percent of the equity in American Golf. This replaces all of the consideration that these shareholders would have received in the proposed merger with National Golf, including the Series C convertible preferred stock that would have been convertible for up to 10 percent of the combined company's equity.

The Series A and B National Golf Preferred OP Units will remain outstanding and a portion of the Units will be converted into a minority equity investment.

Goldman, Sachs & Co. served as financial advisor to GS Capital Partners and Whitehall. Lazard served as investment banker to the Independent Committee of National Golf.

About National Golf and American Golf  

National Golf is a publicly traded company REIT (specializing in the ownership of golf course properties). Its portfolio consists of 116 golf courses at 104 facilities geographically diversified among 22 states. National Golf's Web site can be accessed at http://www.nationalgolfproperties.com.  The company is headquartered in Santa Monica, CA.

American Golf is the largest operator of golf facilities in the world. The company employs over 17,000 people and operates more than 250 private country clubs, destination golf resorts, daily fee and municipal golf courses, and practice ranges in the United States, United Kingdom, Australia and Japan. American Golf's Web site can be accessed at http://www.americangolf.com. The company is headquartered in Santa Monica, CA.

American Golf's public golf operations include numerous prestigious daily fee and resort properties. The company is also the industry leader in improving and managing golf properties owned by governmental jurisdictions including some of the largest cities, counties and park districts nationwide. In addition, the Company's American Golf Country Clubs (AGCC) division -- dedicated exclusively to private club operations -- includes a portfolio of 65 private clubs, and a membership base of over 50,000 members. Over the past several years, American Golf facilities have hosted three USGA Amateur Championships and will host the 2003 U.S. Women's Open and the 2006 U.S. Senior Men's Open at Pumpkin Ridge Golf Club in Portland, Oregon.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

A_Clay_Man

Re: Nat. Golf & American Golf Sold to Goldman Sach
« Reply #1 on: September 17, 2002, 12:11:41 AM »
Ten Grand in cash to boot ;)

1.1 billion to take over the payroll of over 17,000 people. My guess is the real estate alone is worth more. The cypress group paid 290m less for one property.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

John_Conley

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Re: Nat. Golf & American Golf Sold to Goldman Sach
« Reply #2 on: September 17, 2002, 06:52:28 AM »
The RE alone is worth more?  I haven't crunched the numbers, but I read the press release yesterday and thought it came out to $5M to $10M per course.  Still sounded high.

Sounds like they own 116 courses and manage another 134.  

Does anyone see the demand for golf getting better before it gets worse?
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

RJ_Daley

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Re: Nat. Golf & American Golf Sold to Goldman Sach
« Reply #3 on: September 17, 2002, 07:24:03 AM »
John, I don't have the knowhow to break down this deal to real world numbers that we can all understand.  So, I am just shooting in the dark here, but;

If TEE (National golf) came on the market 8 years ago at intitial price of $25per share, and now the shares are being bought out at $12, then isn't that about the same thing as in a private owner developer of one course following the pattern of building or buying a golf course and seeing it fail in drips and drabs and the resale is about half what they had paid for it? I think that TEE hasn't paid or has reduced dividends over the years.  So, isn't that sort of like getting a lousy cash flow on your investment, then dumping it for much less than you paid? REITS have to pay out something like 95% of earnings don't they?  But, 95% of losses isn't much of a dividend yield.

But, if Price got 2% of the equity in TEE and an option to buy 2% of AG(depending on what his buy in price would be), then he may have made out a lot better than 10K and lovely parting gifts, so to speak.  I'd bet that 2% equity in TEE is worth at least 10million.

If you have the time, I would like to hear what some of your thoughts are, even if e-mail rather than waste time and space on this board. I may have this completely wrong since I just have no financial analyst training.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »
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Doug Wright

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Re: Nat. Golf & American Golf Sold to Goldman Sach
« Reply #4 on: September 17, 2002, 07:41:37 AM »
From another news release:

"The deal will also help solve lingering financial problems for National Golf (NYSE:TEE - News), the largest U.S. publicly traded golf course owner, which has been reeling amid the faltering U.S. economy and lower rent payments from its primary tenant, American Golf."

This is clearly a bailout deal that included the assumption of at least $400 million in debt. Goldman, Whitehall and Starwood are some of the smartest, most aggressive players in the real estate finance world, and you can be sure they didn't leave any money on the table. These are financial investors who are interested in one thing--return on investment.

My bet would be you'll see them shedding a lot of TEE's unprofitable courses quite soon, and downsizing the operations significantly. So if you're interested in picking up a golf course or two, there will be buying opportunities.

PS Wasn't American Golf about the worst operator around? They certainly were in Denver. Horrible service, lousy maintenance were their hallmarks. Sure the economy's bad, but they brought this on themselves IMO.

All The Best,  
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »
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John_Conley

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Re: Nat. Golf & American Golf Sold to Goldman Sach
« Reply #5 on: September 17, 2002, 09:03:34 AM »
RJ:

I think you are barking up the right tree.  I see the stock traded between 17 and 22 in 1993 and is now being sold for around 12.  Dividends collected over that period of time were a little more than $13, so I guess the biggest surprise is that an investor DIDN'T lose money over that period.

Doug:

"Horrible service, lousy maintenance were their hallmarks."

It is my contention that for-profit operators MUST provide exactly that in some competitive markets going forward.  Sadly, American Golf may have just been ahead of their time.   :-[

As pointed out on another thread, American Golf had excellent maintenance at a course where they could attract a premium rate.  In Orlando today, a well-maintained course often cannot charge a premium.  What conclusion is an operator to reach?  Wanting a better demand profile and having one are two different things.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

Joel_Stewart

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Re: Nat. Golf & American Golf Sold to Goldman Sachs
« Reply #6 on: March 02, 2009, 01:01:26 PM »
This is a very old thread.

Does Goldman still own these properties?

Rob_Waldron

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Re: Nat. Golf & American Golf Sold to Goldman Sachs
« Reply #7 on: March 02, 2009, 01:20:09 PM »
A portion of the portfolio has been spun off to CNL. They are the Eagle run Properties that have been causing CNL so much grief.

Rich Goodale

Re: Nat. Golf & American Golf Sold to Goldman Sachs
« Reply #8 on: March 02, 2009, 01:21:08 PM »
Now that GS is a bank, why aren't they lending money to the poor people?

Bill_McBride

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Re: Nat. Golf & American Golf Sold to Goldman Sachs
« Reply #9 on: March 02, 2009, 01:23:13 PM »
Now that GS is a bank, why aren't they lending money to the poor people?

Because they are now a bank!  ;)

Joel_Stewart

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Re: Nat. Golf & American Golf Sold to Goldman Sachs
« Reply #10 on: March 02, 2009, 05:26:22 PM »
A portion of the portfolio has been spun off to CNL. They are the Eagle run Properties that have been causing CNL so much grief.

CNL only has 52 golf properties so Goldman still has maybe 200?  It probably hasn't worked out very well for them.

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