Bandon Dunes - What is it worth?

[Bob_Garvelink]

Good Evening,


I am curious what you guys thing Bandon Dunes would sell for if it hit the open market today???  Streamsong just sold for $160 million and I love Streamsong.....but it is not Bandon.


Am I crazy to think that the best golf resort in the world would fetch north of $1 Billion?


The resort is booking out almost 2 full years with very little openings....they could probably raise their fees to over $500 a round in prime season and still be fully booked.


I am just curious....what do you think it would sell for if it hit the open market?

[Steve_Roths]

I think folks will run the numbers on room revenue, rounds, etc. and get to a number.


I think the big difference between Bandon and Streamsong is Bandon only has room for perhaps two more par three courses and a nine hole course.  So, you are limited on adding revenue. 


If it was me, I would remove the 1,2, 3 and 18 hole at Bandon Trails and do a par three course there and have C&C find four more holes back in the woods.

I think you could put another 9 hole course in a couple spots.


You could also rethink the driving range and formalize Shorty's and add in some lodging in that area for more revenue.

[Tom_Doak]

Good Evening,


I am curious what you guys thing Bandon Dunes would sell for if it hit the open market today???  Streamsong just sold for $160 million and I love Streamsong.....but it is not Bandon.


Am I crazy to think that the best golf resort in the world would fetch north of $1 Billion?


The resort is booking out almost 2 full years with very little openings....they could probably raise their fees to over $500 a round in prime season and still be fully booked.


I am just curious....what do you think it would sell for if it hit the open market?

it's worth somewhere between 10x and 15x annual profits.


I could probably come up with a decent estimate on annual profits, but not here.


However, I will say that's why I wish I owned one of my best courses, instead of just designing it for a fee.  My design fee was about a week's worth of green fees at the current price.

[Charlie Ray]

Bansky's could sale for equal prices for Van Eyck's.  But Eyck's don't come up for sale.  Bandon is special because the golf is special.  Streamsong is special because its in Florida.  Real Estate frustrates me because location trumps special. 


Return on investment eliminated.  Bandon x50

[Tim Martin]

What other resort has the climate to offer golf and fill their tee sheets twelve months a year in the U.S. with as many courses as Bandon and what is the premium for having the Pacific Ocean on the perimeter?

[Michael Morandi]

I suppose if I were an architect of Tom Doak’s stature, where his reputation can drive interest in the course, I’d ask for equity in lieu of a design fee in selective cases.

[Mike Hendren]

Tom’s multiple of 10 to 15 times cash flow sounds about right.  As the net operating income/ ebitda is stabilized given historic demand and since there is revenue upside from price increases over time I’d say 15x is reasonable as that equates to a 6.5% capitalization rate (cash on cash return).  I wouldn’t sell for less than that.

[Jeff Schley]

Good Evening,


I am curious what you guys thing Bandon Dunes would sell for if it hit the open market today???  Streamsong just sold for $160 million and I love Streamsong.....but it is not Bandon.


Am I crazy to think that the best golf resort in the world would fetch north of $1 Billion?


The resort is booking out almost 2 full years with very little openings....they could probably raise their fees to over $500 a round in prime season and still be fully booked.


I am just curious....what do you think it would sell for if it hit the open market?

it's worth somewhere between 10x and 15x annual profits.


I could probably come up with a decent estimate on annual profits, but not here.


However, I will say that's why I wish I owned one of my best courses, instead of just designing it for a fee.  My design fee was about a week's worth of green fees at the current price.

Agree, Price to Earnings (P/E) is a common quick way, but limited. As an amateur, I like using price/free cash flow as it gives a more accurate financial picture of a company. Also, you have to look at comparables in that industry for a range. You can see huge disparities based on the industry. You can see a quick look at "cheap" vs. "expensive".

https://finviz.com/groups.ashx?g=industry&v=120&o=pfcf
Pros and experts look at these tools in depth and further zero in on certain companies based on comparables.  I'm an index fund investor anyway as I don't have the time, passion nor ability to beat it.

[Steve Lapper]

 Tom's multiple of profits is the right idea, although I might differ on the #. The formulas, whether measured by EBITDA or free cash flows, are the baselines for structuring most acquisition valuations.


 There are quite a few variables that would impact both a valuation and a potential bid for the asset:


Does the resort have both more housing and golf capacity? If so, do construction costs justify the expansion? What are the costs of capital, and what is the current cost of debt (if needed to finance the acquisition, or needed for asset servicing)? How fast are operational costs rising? What are the operating margins? Are they expandable?Are operational efficiency improvements complete? If not, what appears to be the cost to making them? Are labor costs stable? What is the deferred maintenance on the physical structures? What is the mix of play, daily fee v. on-property, etc?

Golf courses usually don't trade at higher multiples unless they have developable real estate, and to a lesser degree, year-round playability. Resorts usually are valued on a combination of all the above, but are discernibly impacted by ease of travel for visitation. Bandon, as great as it is, would find some multiple compression on this relative to a Kiawah or Pebble.

  I've been wondering a bit about the Streamsong valuation. Without actual numbers and metrics, I'd only be speculating, yet it's interesting to question just how it was conceived. Another big question is what, if any, will be the impact of Cabot Citrus and its future evolution?
 

[Tom_Doak]

I suppose if I were an architect of Tom Doak’s stature, where his reputation can drive interest in the course, I’d ask for equity in lieu of a design fee in selective cases.

I have certainly looked into that, but my experience is that I'm only offered equity in the projects that aren't likely to be very profitable.

[Drew Maliniak]

For what it's worth, my very rough back of the envelope math puts Bandon around $750M if valued based on 35,000 rounds per year @ ~$250 per round across 5 courses at 15 times earnings. I could see someone getting to $1B rather easily once factoring in food and property.

I would be curious what a DCF would spit out because a resort like Bandon could operate for hundreds of years.

Frankly, I think Kemper got a pretty good deal on Streamsong.

[Sven Nilsen]

For what it's worth, my very rough back of the envelope math puts Bandon around $750M if valued based on 35,000 rounds per year @ ~$250 per round across 5 courses at 15 times earnings. I could see someone getting to $1B rather easily once factoring in food and property.

Your rounds estimate is light, the resort will probably top 240,000 this year (contrast that to 2019 when the number was around 150K).  But your cost per round is probably high, if you consider the offseason and replay rates.

[Jeff Schley]

For what it's worth, my very rough back of the envelope math puts Bandon around $750M if valued based on 35,000 rounds per year @ ~$250 per round across 5 courses at 15 times earnings. I could see someone getting to $1B rather easily once factoring in food and property.

I would be curious what a DCF would spit out because a resort like Bandon could operate for hundreds of years.

Frankly, I think Kemper got a pretty good deal on Streamsong.

Drew the value would be from net profit, not revenue, times your preferred multiple. So I don't think it would be anywhere near 1 billion.

[John Kavanaugh]

25% of Pebble.

[Steve Lapper]

For what it's worth, my very rough back of the envelope math puts Bandon around $750M if valued based on 35,000 rounds per year @ ~$250 per round across 5 courses at 15 times earnings. I could see someone getting to $1B rather easily once factoring in food and property.

I would be curious what a DCF would spit out because a resort like Bandon could operate for hundreds of years.

Frankly, I think Kemper got a pretty good deal on Streamsong.

Drew the value would be from net profit, not revenue, times your preferred multiple. So I don't think it would be anywhere near 1 billion.

Jeff is correct. It is net profit, not revenue. Additionally, I think the 15X multiple that everyone here is throwing around is 20-30% rich. Higher interest rates equate to more compressed multiples.

[David_Elvins]

The key is to find a way to call it a tech company. 


Then its worth anywhere between $3bil and $180bil.

[Alex Miller]

For what it's worth, my very rough back of the envelope math puts Bandon around $750M if valued based on 35,000 rounds per year @ ~$250 per round across 5 courses at 15 times earnings. I could see someone getting to $1B rather easily once factoring in food and property.

I would be curious what a DCF would spit out because a resort like Bandon could operate for hundreds of years.

Frankly, I think Kemper got a pretty good deal on Streamsong.

Drew the value would be from net profit, not revenue, times your preferred multiple. So I don't think it would be anywhere near 1 billion.

I have it close... I think we've all spent some serious $$$ on golf, but because Bandon is so high quality and provides a great value we might forget that they bring in serious revenue. From golf, lodging, food, and merchandise, with healthy operating margins too.


I think Drew and I had similar assumptions, though my avg price per round was lower. My back of the napkin estimate from a valuation perspective is ~$800M, but value is really what someone will pay, and there is even still a growth case for Bandon. I'd guess it's worth $1B within a few years, if not already.

[Tim Martin]

For what it's worth, my very rough back of the envelope math puts Bandon around $750M if valued based on 35,000 rounds per year @ ~$250 per round across 5 courses at 15 times earnings. I could see someone getting to $1B rather easily once factoring in food and property.

I would be curious what a DCF would spit out because a resort like Bandon could operate for hundreds of years.

Frankly, I think Kemper got a pretty good deal on Streamsong.

Drew the value would be from net profit, not revenue, times your preferred multiple. So I don't think it would be anywhere near 1 billion.

I have it close... I think we've all spent some serious $$$ on golf, but because Bandon is so high quality and provides a great value we might forget that they bring in serious revenue. From golf, lodging, food, and merchandise, with healthy operating margins too.


I think Drew and I had similar assumptions, though my avg price per round was lower. My back of the napkin estimate from a valuation perspective is ~$800M, but value is really what someone will pay, and there is even still a growth case for Bandon. I'd guess it's worth $1B within a few years, if not already.

Would it be fair to say that they sell more merchandise than any other golf course/resort on the planet?

[Peter Sayegh]

Would it be fair to say that they sell more merchandise than any other golf course/resort on the planet?

No way Bandon can sniff PCC's merch revenue in my opinion.
With St. Andrews, I'd bet they're the top three by a mile.

[Tim Martin]

Would it be fair to say that they sell more merchandise than any other golf course/resort on the planet?

No way Bandon can sniff PCC's merch revenue in my opinion.
With St. Andrews, I'd bet they're the top three by a mile.

Peter-What is PCC?

[Brian Finn]

Would it be fair to say that they sell more merchandise than any other golf course/resort on the planet?

No way Bandon can sniff PCC's merch revenue in my opinion.
With St. Andrews, I'd bet they're the top three by a mile.

Peter-What is PCC?

He must mean Pinehurst CC

[Peter Sayegh]

Yes, Pinehurst. Sorry for the confusion.

[Steve Lapper]

For what it's worth, my very rough back of the envelope math puts Bandon around $750M if valued based on 35,000 rounds per year @ ~$250 per round across 5 courses at 15 times earnings. I could see someone getting to $1B rather easily once factoring in food and property.

I would be curious what a DCF would spit out because a resort like Bandon could operate for hundreds of years.

Frankly, I think Kemper got a pretty good deal on Streamsong.

Drew the value would be from net profit, not revenue, times your preferred multiple. So I don't think it would be anywhere near 1 billion.

I have it close... I think we've all spent some serious $$$ on golf, but because Bandon is so high quality and provides a great value we might forget that they bring in serious revenue. From golf, lodging, food, and merchandise, with healthy operating margins too.


I think Drew and I had similar assumptions, though my avg price per round was lower. My back of the napkin estimate from a valuation perspective is ~$800M, but value is really what someone will pay, and there is even still a growth case for Bandon. I'd guess it's worth $1B within a few years, if not already.

Would it be fair to say that they sell more merchandise than any other golf course/resort on the planet?

For Merch sales, Bandon and Pinehurst probably don't sniff Pebble Beach's #s.

[Buck Wolter]

There's a huge option value in Bandon that doesn't include golf

[Peter Sayegh]

Steve, I forgot about Pebble but I'd still take Pinehurst. If someone is in the area, be it playing TR or MP/PN/SP, they're gonna visit the Pinehurst pro shop.
Top three (upon reflection) gotta be Pinehurst, Pebble, St. Andrews.