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JohnV

National Golf Properties in financial trouble
« on: February 12, 2002, 09:21:58 AM »
The following article talks about how National Golf Properties (TEE) has suspended dividends because its subsidiary, American Golf, has failed to make lease payments on time.  Looks like more trouble for the big guys in the golf industry.

Reuters Article

In the article they talk about National Golf taking over American Golf and bringing it into the company.  If that happens, National Golf would have to reform the company as a non-REIT because a REIT can't run the properties they own.  This would cost them major tax benefits and a loss of investor confidence.

REIT= Real Estate Investment Trust.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

Patrick_Mucci

Re: National Golf Properties in financial trouble
« Reply #1 on: February 12, 2002, 03:18:07 PM »
JohnV,

I thought a REIT or a Paper Clip REIT could manage properties owned by the REIT.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

Paul Richards

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #2 on: February 12, 2002, 06:15:10 PM »
I owned that dog of a stock for years.

Sold it and bought Enron, though ....

 :'( :'( :'(
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »
"Something has to change, otherwise the never-ending arms race that benefits only a few manufacturers will continue to lead to longer courses, narrower fairways, smaller greens, more rough, more expensive rounds, and other mechanisms that will leave golf's future in doubt." -  TFOG

John_Conley

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #3 on: February 12, 2002, 08:43:25 PM »
Thanks for the late breaking news!

We're now reading more and more about things that have been known for 18 months.

Regarding "paper-clip" REITs... I think they may be the same as "paired-share" REITs that were done away with a few years ago.  Remember when there were bidding wars for horse racetracks?  Those were the type of properties that allowed REITs to both own and manage, if memory serves.

For more, look for financial articles on MEDITRUST, "MT" on the exchange.  I can't remember how it all played out, but it doesn't seem to come up anymore.  Today's REITs are "vanilla".
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

A_Clay_Man

Re: National Golf Properties in financial trouble
« Reply #4 on: February 12, 2002, 08:54:31 PM »
Who here can honestly say that they've had a wonderful "staff" experience at an American golf facility?
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

Joel_Stewart

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #5 on: February 12, 2002, 09:39:54 PM »
What are the trophy properties for American Golf?  

I wonder if the contracts between American Golf and the owners (for the sake of conversation say municipalities) allow an escape clause in case of bankruptcy?
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

SL_Solow

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #6 on: February 13, 2002, 06:50:01 AM »
Bankruptcy out clauses are unenforcible as a matter of law: see section 365(b)(2) of the Bankruptcy Code.  Thus if a Bankruptcy is filed, the management contracts are likely to e viewed as assets of the estate and may be part of a reorganization or they may be sold to others wishing to manage the properties.                                                    
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

JohnV

Re: National Golf Properties in financial trouble
« Reply #7 on: February 13, 2002, 09:32:23 AM »
Patrick, I'm not sure of the law, but I based that on articles I've read lately about NGP/AG and what would have to happen.  As I understand it the reason they formed American Golf was to get around the law prohibiting them from running the clubs they owned.  American Golf then started running other courses.  I wonder if they are making payments to others such as New York City (don't they run their munis?)

As for good service at an American Golf property, I would say that the folks at Pumpkin Ridge have always been very nice to me and to non-members I know.

Pumpkin Ridge is the primary trophy property of National Golf, although they only own 50% of it.

Some others that are supposed to be good are Golf Club of Oklahoma and Hershey Country Club
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

Lou Duran

Re: National Golf Properties in financial trouble
« Reply #8 on: February 13, 2002, 01:22:09 PM »
I am a member of a NGP owned/AGC operated private club.  It is a good course, but poorly maintained and under-managed.  During the years of the NGP/AGC regime most of the long-time members have been run-off, and the general attitude is "if you don't like what we offer, be carefull when you leave that the door doesn't smack your ass".  Regretfully, I still have a couple hundred of shares of NGP.   Now that the dividend has been suspended I no longer have the yield to point to as an excuse for staying in the stock.

AGC is David Price, an L.A. lawyer, and his family.  I believe that Mr. Price and his son also own some 50% of NGP's stock, (the REIT).  NGP owns the properties/courses which are leased to AGC on a long-term basis.  AGC operates the courses and is supposed to pay NGP fixed lease/rent payments.  AGC keeps anything left over from dues and green fees after paying all expenses.  AGC did own some courses which were transfered/sold to NGP (at what inflated valuations, god only knows).

NGP represents that its management agreement with AGC is arms-length, and that security laws prevent it from managing its own properties.  Personally, I believe that there is a huge inherent conflict of interest here.  I know that we are still paying dues at my club, so I am unsure what AGC is doing with the cash that it is not passing through to NGP.  I doubt that NGP has gone to court to somehow impound or garnish the revenues- I just can't see a Price controlled board suing a closely-held Price corporation.   Perhaps my views have been jaded by the Enron mess.

I am a firm believer in markets and the concept of enlightened self-interest.  But I think that what is hurting the game of golf today is greed without restraint.  I think that the Wall Street mentality in equipment manufacturing, development, and management is really screwing things up.  Nobody knows how things will shake-out, but I am hoping for a return to the days of mom and pop owner/operator public golf and private equity clubs.

« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

Lynn Shackelford

Re: National Golf Properties in financial trouble
« Reply #9 on: February 13, 2002, 06:22:01 PM »
This is just the start of some huge shaking out of the industry in 2002.
Lou Duran     If things do go in cycles you may get your wish about a return to mom/pop and American companies in the business.
American Golf had huge success in the 80's.  This attracted Wall St. money and other conventional big lenders.  It brought in businessmen who didn't know or care about golf.  Now with too many CCFAD facilities, no growth in players, the "big boys" will be leaving and looking elsewhere.  So may the foreign companies who own Taylor Made, Titleist and Wilson.  That part will take a couple of years.  American Golf must do something in the next 90 days.
Bankruptcy, interesting situation for the legal minds at American Golf.  Most of their municipal leases state the lease can be terminated if there is a bankruptcy.  And yet isn't that the purpose of bankruptcy, to save and reorganize the assets?  I have heard some American Golf managers say they don't have the money in their budget to have scorecards after September.
There is going to be a whole lot of shaken going on.....
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

GeoffreyChilds

Re: National Golf Properties in financial trouble
« Reply #10 on: February 13, 2002, 06:24:54 PM »
John

Yes indeed, American Golf does run the New York City munis.  

From my limited experiences (although a group of us did play Split Rock this past weekend) they don't do a really good job.  

The courses are generally packed from dawn to dusk, play is painfully slow and the conditions are poor.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

Lynn Shackelford

Re: National Golf Properties in financial trouble
« Reply #11 on: February 13, 2002, 06:25:02 PM »
I forgot, S L Sokow, your post is most interesting.  Rumors are flying about American Golf going into bankruptcy.  So then their assets could only be purchased after a court appointed trustee agrees to the total reorganization plan?
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

Don_Mahaffey

Re: National Golf Properties in financial trouble
« Reply #12 on: February 13, 2002, 07:13:44 PM »
There is an AG/NGP course across the street from my course. Here an example of big business gone wrong. They have a national account with a certain fertilizer company. So, they supposedly get great fertilizer prices, but they must buy from this company. Problem is, this company specializes in homogenized prill, dust free, balanced fertilizers that are very expensive (even at AG prices) on a cost per nutrient basis. There is a large fertilizer plant in AZ that supplies the agricultural market and we can buy fertilizer from them much cheaper then the stuff the AG course has to pay for with their special deal. This is one example where their so called economies of scale didn't work.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

SL_Solow

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #13 on: February 14, 2002, 07:00:35 AM »
Lynn; not quite the case.  Short course follows, if a Chapter 11 is filed they would try to reorganize.  Their plan might include the sale of all or part of their properties or contracts.  If they try to assign the contracts a buyer would have to cure defaults and give "adequate assurances of future performance."  A Judge would decide disputes on these issues.  If the case is a Chapter 7 liquidation a trustee would be appointed.  The trutee could assign(sell) the contracts subject to the same conditions.  If you want more detail or other information contact me off line.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

SL_Solow

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #14 on: February 18, 2002, 06:52:21 AM »
Noted that Golfweek reports that a shareholders suit has been filed against NGP and certain of its management alleging financial misrepresentation.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

A_Clay_Man

Re: National Golf Properties in financial trouble
« Reply #15 on: February 18, 2002, 08:16:45 AM »
Lou- Whats going on is not greed, it's the result of greed. The greed is over. And if this isn't a great testimony for the evils of Corp. management from pro-shop to maintanence.

Long live the next cycle of projects that are born out of respect and love for the game.

 ;D
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

RJ_Daley

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #16 on: February 20, 2002, 12:06:41 PM »
Just off of CNBC, Joe Kernan are the comments along SL Solow's points that litigation from shareholders is on the way.  Reportedly, Milberg-Weis a shareholder lawsuit specialist firm has taken a position.  The stock fell another 20% today.   Comments about David Price and his 80% stake in both NGP and AG, and comments about misrepresentation of the financial conditions of both entities.  Now it remains to be seen if Price or other insiders had dumped any stock in last few years, while books may have been cooked...  Or irregularities in less than arms length deals with suppliers, as Don's information suggests room for those possibilities.

Tell your kids the new career path to follow is forensic auditting!  It will be the hot job of the 2000s.  Or, a guard (greenskeeper) at those country club prisons where they put the gonifs when they are caught. :-/
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »
No actual golf rounds were ruined or delayed, nor golf rules broken, in the taking of any photographs that may be displayed by the above forum user.

A_Clay_Man

Re: National Golf Properties in financial trouble
« Reply #17 on: February 20, 2002, 12:15:23 PM »
Dick- I for one find it very sexy when you speak yiddish. Keep it up, sie gehe gesund
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

SL_Solow

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #18 on: February 20, 2002, 01:22:52 PM »
R.J.  Milberg Weis is a prominent plaintiffs' class action firm specialising in securities class actions. (they have been called "strike suiters by some)  If they are involved major litigation is likely to follow against the company, board and officers.  If he company is already weak a bankruptcy filing may follow merely as a means of stalling the litigation.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

SPDB

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #19 on: February 20, 2002, 01:32:54 PM »
SL Solow - any relation to the NY developer/commercial real estate owner?
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

SL_Solow

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #20 on: February 20, 2002, 01:50:08 PM »
No I'm not and I certainly don't have his money although we share a first and last name.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

Lou Duran

Re: National Golf Properties in financial trouble
« Reply #21 on: February 20, 2002, 04:34:53 PM »
SLS:

There appears to be two or more law firms seeking class action status in suits against NGP/AGC.  Do you know if it is common for plaintiff's attorneys to compete for representation?  Do the suits get consolidated?  Is the motivation of the lawyers a 35%+ contingency fee plus expenses?
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

SPDB

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #22 on: February 20, 2002, 04:58:10 PM »
SL Solow

That's too bad, I was going to ask you to put in a good word for me with your dad/uncle/brother as I try to get to out of my current lease.

but I digress.

:D :D :D :D
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

SL_Solow

  • Karma: +0/-0
Re: National Golf Properties in financial trouble
« Reply #23 on: February 21, 2002, 10:32:19 AM »
SPBD; sorry about the lease,I understand he is pretty tough.
Lou; In large matters it is common for plaintiff's firms to each find a class representative and vie for the position as lead counsel.  The technical term is a "feeding frenzy."  Cases will usually be consolidated and if the parties cannot agree the court will designate the lead counsel.  The motivation clearly is the fees as well as the publicity which may lead to other cases.  Contingency percentages may vary depending upon the sophistication of the client and the stage of the case at settlement.  But I'd rather talk about golf course architecture.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

jim__janosik

Re: National Golf Properties in financial trouble
« Reply #24 on: February 21, 2002, 06:53:59 PM »
In  do know trhat PRice has been trying to seell AGC for  at least  three  years if not longer but nobody  wanted it.  CCA
turned him down and so did KSL, not rumor, fact.(owners of La  Quinta,  PGA West,  La  Costa,  Doral.)

THis shake down will  leave some victims for whicvh I am sorry but the  Golf Business is long overdue for a purging
so  let it begin!!!!!!!!!!  Back to smaller operators  and  better
working environments.
« Last Edit: December 31, 1969, 07:00:00 PM by 1056376800 »

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