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Steve_ Shaffer

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"Some of us worship in churches, some in synagogues, some on golf courses ... "  Adlai Stevenson
Hyman Roth to Michael Corleone: "We're bigger than US Steel."
Ben Hogan “The most important shot in golf is the next one”

Lou_Duran

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Re: Roswell country club sells to New York hedge fund for $9 million
« Reply #1 on: August 05, 2020, 02:42:41 PM »
At first I thought this was a redevelopment opportunity.  At $60k/acre, it seems high for a golf course  to generate a good return.  But for apartment and high-end residential, it would make sense.  I then found this:

https://www.bizjournals.com/atlanta/news/2020/08/04/golf-course-atlanta-clubcorp-sculptor.html

As our government drives interest rates to negative through financial manipulations, expect more of these gymnastics.  It would be interesting to know where the $2 billion raised by the buyer came from and what ClubCorp intends to do with its $64+ million in financing (maybe Apollo is taking some money off the table; maybe new acquisitions or improvements to existing properties?). 

Will Lozier

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Re: Roswell country club sells to New York hedge fund for $9 million
« Reply #2 on: August 05, 2020, 03:09:50 PM »
Brookfield is where my wife grew up, attending Roswell HS. I've played it a few times and it is a fun course. Not sure what to make of this sale?!?!


Will ask a friend who is a member...


Cheers

Edward Glidewell

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Re: Roswell country club sells to New York hedge fund for $9 million
« Reply #3 on: August 05, 2020, 09:11:47 PM »
Seems strange to me.


It's already a residential course (to an extent; there are some internal holes that border each other with no houses but other holes run through housing corridors), so it's not like they can just redevelop the whole area into a new subdivision. There's definitely room to build houses in some places, but it's certainly not the same as buying a core golf course with no housing anywhere.

jeffwarne

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Re: Roswell country club sells to New York hedge fund for $9 million
« Reply #4 on: August 06, 2020, 09:35:23 AM »
Mike Young could better speak to this,but it may well be a play on recent lawsuit wins creating conservation writeoffs.
(A way for rich people to bury previous gains, and pay others for the ability to do it)


If anybody can figure that out, Apollo can.
« Last Edit: August 06, 2020, 09:57:42 PM by jeffwarne »
"Let's slow the damned greens down a bit, not take the character out of them." Tom Doak
"Take their focus off the grass and put it squarely on interesting golf." Don Mahaffey

Jonathan Webb

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Mike Hendren

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Re: Roswell country club sells to New York hedge fund for $9 million
« Reply #6 on: August 06, 2020, 01:44:39 PM »
There is a super-abundant amount of raised and pledged liquidity in a plethora of U. S. funds that's itching to be deployed.   Investment options are limited today and at least from a real estate perspective are concentrated in industrial and multi-family properties with capitalization rates remaining historically low around 5.0%.  That's IF you are one of the twenty lucky bidders.  Office and retail have fallen out of favor and don't even mention hospitality.  I might rather own a golf course 15 years from now than a vacated Dollar General store in the middle of nowhere.

So, where do you invest?  A ground lease is a darned good place to start, particularly on a golf course in a decent metropolitan area.  You get the benefit of a good, immediate net cash-on-cash return (all anybody's worried about today) plus some residual down the road by banking the land (not worth much on a NPV basis).   The fund managers benefit from fees paid as well as getting impatient investors off their backs.   The seller likely doesn't care about the rent unless it's usurious and with the 10 years treasury yield flirting with 50 basis points, a rent factor of 6 to 7% is pretty lucrative on a risk adjusted basis. 

I assume the ground lease has extension options, likely out to 40 years or more at which time the current membership will be pushing up daisies.  The club gets a significant amount of cash for improvements and or distributions to members/investors  and can worry later, if at all about the negative impact on signing up new members as the ground lease burns off. 

Than again, I might have this all wrong. 

Bogey
« Last Edit: August 07, 2020, 11:24:33 AM by Michael H »
Two Corinthians walk into a bar ....

A.G._Crockett

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Re: Roswell country club sells to New York hedge fund for $9 million
« Reply #7 on: August 06, 2020, 03:24:20 PM »
Brookfield is where my wife grew up, attending Roswell HS. I've played it a few times and it is a fun course. Not sure what to make of this sale?!?!


Will ask a friend who is a member...


Cheers
I'm curious, Will; I taught and coached at Roswell High for 28 years.  I left at the end of the 2008 school year, so I may have come across your bride?  If I did, and she says terrible things about me, they are probably all true.

I was the golf coach for a few years late in my career; Brookfield was our home course and most of our players were members.  Mike Riley did a great renovation/redesign in 2000, and MANY years ago the course hosted the Lady Michelob LPGA tournament.  Great club; always has been.
I have heard, though I know little for sure, that Club Corp is selling off properties to raise cash needed to pay of some equity share issues on courses they own in California.  Club Corp also recently sold The Neuse in Raleigh that I know of; there may be others elsewhere.
"Golf...is usually played with the outward appearance of great dignity.  It is, nevertheless, a game of considerable passion, either of the explosive type, or that which burns inwardly and sears the soul."      Bobby Jones

Peter Pallotta

Re: Roswell country club sells to New York hedge fund for $9 million
« Reply #8 on: August 06, 2020, 04:45:24 PM »
There is a super-abundant amount of raised and pledged liquidity in a plethora of U. S. funds that's itching to be deployed.   Investment options are limited today and at least from a real estate perspective are concentrated in industrial and multi-family properties with capitalization rates remaining historically low around 5.0%.  That's IF you are one of the twenty lucky bidders.  Office and retail have fallen out of favor and don't even mention hospitality.  I might rather own a golf course 15 years from now than a vacated Dollar General store in the middle of nowhere.

So, where do you invest?  A ground lease is a darned good place to start, particularly on a golf course in a decent metropolitan area.  You get the benefit of a good, immediate net cash-on-cash return (all anybody's worried about today) plus some residual down the road by banking the land (not worth much on a NPV basis).   The fund managers benefit from fees paid as well as getting impatient investors off their backs.   The seller likely doesn't care about the rent unless it's usurious and with the 10 years treasury yield flirting with 50 basis points, a rent factor of 6 to 7% is pretty lucrative on a risk adjusted basis. 

I assume the ground lease has extension options, likely out to 40 years or more at which time the current membership will be pushing up daisies.  The club gets a significant amount of cash for improvements and or distributions to members/investors  and can worry about the negative impact on signing up new members as the ground lease burns off. 

Than again, I might have this all wrong. 

Bogey


Bogey -- it appears you usually prefer to keep your lamp hidden under a bushel! This post was an real education for me -- thanks.

David Ober

  • Karma: +0/-0
Re: Roswell country club sells to New York hedge fund for $9 million
« Reply #9 on: August 07, 2020, 10:27:29 PM »
Brookfield is where my wife grew up, attending Roswell HS. I've played it a few times and it is a fun course. Not sure what to make of this sale?!?!


Will ask a friend who is a member...


Cheers
I'm curious, Will; I taught and coached at Roswell High for 28 years.  I left at the end of the 2008 school year, so I may have come across your bride?  If I did, and she says terrible things about me, they are probably all true.

I was the golf coach for a few years late in my career; Brookfield was our home course and most of our players were members.  Mike Riley did a great renovation/redesign in 2000, and MANY years ago the course hosted the Lady Michelob LPGA tournament.  Great club; always has been.
I have heard, though I know little for sure, that Club Corp is selling off properties to raise cash needed to pay of some equity share issues on courses they own in California.  Club Corp also recently sold The Neuse in Raleigh that I know of; there may be others elsewhere.


Interesting regarding Club Corp. I was one of those they had to "pay out." Evidently when I joined a Club Corp club back in 1993(?) I paid a $3,000 "initiation fee" that was actually due back to me in 30 years. But they were not giving those fees back to people. Someone sued and won.


They called me out of the blue about three months ago and said that they owed it to me in three years and would I take a $1500 gift cert now instead of waiting three years, and I said, "Sure." So I now have a $1500 Club Corp gift cert.


So I got that goin for me ...