Who is the Boss of Golf Course Development?
So this has gotta be a niche area of real estate, but do any of you know who handles the financial end on golf course development projects? Or in housing communities with golf courses? I know that Trump is currently renovating Doral, but I'm focusing on the more common projects.
Are there branches in some random RE firms that deal with projects like this? Or are these investments generally seen as too unprofitable for firms to even touch, leaving them to billionaires with disposable income?
I mean there's gotta be some people looking at returns on investment and all that outside of the architects and guys who actually build the greens.
The majority of golf courses are not Cashflow positive and have suffered severely the past 5 years from both demographic shifts as well as reduced discretionary income. I have assisted in multiple golf course valuations throughout the United States and I would say that of the 15% that are Cashflow positive, the NOI margins on these are a mere 10%-15%, which is very weak compared to other RE asset classes.
I know getting financing for golf courses is very difficult if you don't have golf course development or operational experience. The past couple years investors have been picking these things up at 1-3 times gross revenue from distressed sellers.
I think the advisory part would fall under most banks' leisure groups.
On the principal side, this guy Mike Meldman seems legit, he's a friend of Hank Haney's, tho the co's had some troubles through the downturn.
http://www.discoverylandco.com/
@REValuation -- how do you go about valuing a golf course? That sounds pretty cool, and I've never seen anyone on here that does that. Per my name, I'm obviously quite interested in that
It pretty straightforward. Build up the cash flow. You will have green fee revenues and club house revenues (both food and beverage sales and merchandise and equipment sales). There could be other revenues like cart usage, driving range, golf school etc. Costs will be course maintenance and cost of goods sold. Property taxes can be high if the course is in a desirable location. Depending on how full service your course is you will have a large or small admin expense. Capex is a pretty variable expense. Some companies will run courses into the ground and others will spend a lot on capex.
There are a few publicly traded golf course companies. Find out what their betas are and also what EBITDA multiples they trade at.
Do a DCF and Multiple valuation and voila, you have a ball park figure for value.
Hi RE_Banker, can you explain exactly do you mean by Multiple valutation?
And on a slightly different topic, my reading of the market right now is that it's an awful time to be in golf courses. Here's an article that sheds some light on the over-development in the market from a home buyer's perspective: http://online.wsj.com/article/SB100014240527023037030045774745633686320… Better to be on the consumer than the supplier side of that industry right now, to be honest my friend.
Not sure what role they've had, but Tavistock Group shows Isleworth and a few other courses and planned developments
Another guess is Hospitality shops that would buy the resort and then potentially improve the Course and its business.
KSL focuses on resort investing, which includes golf courses. They don't necessarily develop, they reposition.
How would someone become involved in a lead role in investment management at one of these firms? Join young and get promoted, or have 10 years experience in a bigger place, maybe with an mba thrown in?
I worked in a group at a major bank that dealt with tons of busted residential deals, many of them involving golf courses. The golf course definitely brought more headache into the picture than collateral value. There's just too much supply out there. Why build a golf course right now? If your heart is truly set on golf courses, I'd try and get into the management side of things. Not as glamorous as the development, but there might actually be demand for it.
I have seen alot of these (especially in Florida) and one huge problem arises after the local course tanks and the HOA is stuck with a bunch of deed restricted land that you can't build on.
As far as valuation goes, you value golf courses the same way you value every other property level asset: income, cost (never seen this used, way to many variables), and market (sales). Valuing on EBITDA multiples is logical, but there is very little public information floating around and course margins vary dramatically by region and type of ownership.
@Westcoast- There is no "correct path" but getting a job for a company like ClubCorp would be wise. They have a business model that is designed for the new era of golfers. Imagine paying your normal country club dues, but instead of being restricted to a few courses, you can golf at hundreds of clubs and resorts everywhere at the same discounted rate.. It’s not a bad deal if you like to travel around and play golf, but who would want to do that!
www.clubcorp.com
Exercitationem maiores eius voluptatem autem. At aperiam eius dolor error iusto eaque.
Unde accusamus quis et dolores. Et corrupti possimus sunt quod ut. Quisquam non eaque laborum inventore eum ab quam aut. Quisquam rerum tempora veritatis nam similique corporis ab. Exercitationem dicta corporis repellat repellat accusantium provident blanditiis.
Delectus velit et minima reiciendis soluta ullam. Saepe perferendis amet at voluptatem qui cum error possimus. Ut doloremque neque aspernatur possimus praesentium aut. Molestiae vero ad maxime.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...