Kapalua Plantation Course fetches a tidy sum

[Eric_Terhorst]

from http://www.sec.gov/Archives/edgar/data/63330/000110465909018538/a09-7819_1ex99d1.htm

KAPALUA ENTERS INTO AGREEMENT FOR SALE-LEASEBACK OF
THE PLANTATION GOLF COURSE
 
KAHULUI, Hawai’i — Maui Land & Pineapple Company, Inc. (NYSE: MLP) today announced that it has entered into a definitive agreement for the sale of The Plantation Course to TY Management Corporation, a Hawai’i corporation, for $50 million.  Under terms of the sale, which is expected to close before the end of March, Kapalua Plantation Golf LLC, a subsidiary of MLP, will enter into a renewable two-year lease to operate The Plantation Course on behalf of the new owner.  The company will use proceeds from the sale to reduce debt.

 
“In this transaction, we will receive cash for the sale of the land and improvements, and will continue to operate The Plantation Course under the Kapalua brand with our golf management team,” stated Robert Webber, president and CEO of Maui Land & Pineapple Company, Inc.  “We expect our golf team, led by Gary Planos, to continue to operate The Plantation Course in a manner that has led to Kapalua Resort’s world-wide recognition as the number one golf resort in Hawai’i and host site for the prestigious PGA TOUR season opening event, the Mercedes Benz Championship.  We would not have entered into this transaction if the new owner did not share our commitment to provide the highest quality golf experience and to work closely with us to maintain a seamless and integrated resort experience for our guests and residents.”

 
“We look forward to continuing the experience at The Plantation Course of welcoming guests from all over the world to enjoy the unique playability and beauty of what has become Hawai’i’s most popular course,” said Gary Planos, Senior Vice President/Resort Operations and Tournament Chairman of the Mercedes-Benz Championship.   “We believe the Kapalua Resort will continue to exceed expectations with our service standards and overall golf experience.”

 
The 7,411-yard Plantation Course, designed by Bill Coore and Ben Crenshaw, plays across natural panoramic vistas and century old pineapple plantation fields.  Opened in 1991, The Plantation Course recently emerged from a major renovation, including the re-grassing of all 18 greens to Ultradwarf TifEagle grass, re-contouring of many of the greens, renovations of all bunkers, the addition of several new tees, and cart path modifications.  At the same time, the clubhouse and The Plantation House Restaurant were renovated.

 
Maui Land & Pineapple Company, Inc. is a Hawai’i corporation and successor to a business organized in 1909. Its principal operating subsidiaries are Maui Pineapple Company Ltd., a producer and marketer of Maui Gold ® pineapple, and Kapalua Land Company Ltd., operator of Kapalua Resort, a master-planned resort community in West Maui.

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Is it just Location, Location, Location, Location that makes for a $50 million golf course?  Or is it the Location + Golf Course Architecture?

[Steve_ Shaffer]

TV esposure has a lot to with the value of the course. This equals high green fees. See Pebble Beach. However the owners need for cash has more to do with this sale.

[Dan Moore]

Kapalua $50 mil 

Ravisloe  $3.5

Spring Valley priceless

[Eric_Terhorst]

Kapalua $50 mil 

Ravisloe  $3.5

Spring Valley priceless

So Dan you're saying it's the architecture 

[Tom_Doak]

The real estate underneath The Plantation Course is probably worth $50 million, so that's got a lot to do with the price.  That's also one reason they (and everyone else in Hawaii) command such high green fees ... everything is more expensive in Hawaii because of the cost of real estate.

But it's also a twelve-month golf season, and they are probably playing 50,000 rounds times $175 green fees ... that's a lot of cash flow.  If you were buying any other business that generated that kind of cash, it wouldn't be cheap.

[rjsimper]

Is there any chance this is a precursor toward selling the property off as homes (Hopefully not) but seems like giving them a 2 year lease to operate the golf course gives the new owners the ability to simply not renew it in 2, 4, or 6 years and cash out.  Unless it is a lessor-only renew option.