By all accounts, the volume of golf course transactions are up, and some predict that sales in 2010 will double what we saw in 2009. Most of these are struggling courses. But for many, the owner is struggling and not necessarily the course.
Joe Beditz, president and CEO of the National Golf Foundation, has predicted that rounds and revenue will stay flat in 2010, leading to more transactions.
“We believe that the number of transactions might increase in the future for a few reasons,” Beditz said. “As interest rates rise and current loans are "re-set", an increasing number of owners will find it difficult to remain current on their loans. Second, owners who are currently covering operating deficits will be unwilling to do so forever.”
All of this could mean good values on the market. So, it makes one wonder whether it is a good time to buy a golf course?
Comments
I definitely agree that it is an excellent time to buy a golf course - if you have the equity to not only purchase the property but to make any needed improvements to maximize its potential. There are some incredible opportunities in the marketplace right now. As the addage goes, buy low, sell high and the prices are certainly low. Many of the courses that have had financial difficulty can be turned around and made profitable with good management, strategic investments, and solid marketing.
Sure, it makes sense to buy low, sell high. We have been examining opportunities for the past several months.
At this time, there still seems to be bid-ask gap between what sellers are asking and buyers are willing to pay. Many courses are worth little more than what it will cost you to fix them, and the risk is substantial. You can spend a lot of time and money on due diligence on deals where, at the moment of truth, the seller is not really ready to let go.
Regarding the comment above on turning courses into alternative energy sites: I have just enough experience in alternative energy (specifically PV solar) to be dangerous. The idea might sound attractive, but it is extremely complicated, and most deals are not penciling out for investors (even with federal and state rebates) -- and therefore are not getting financed. You will get a lot of NIMBY (not in my backyard) resistance, and you'll have to a negotiate a power price with the local utility. You could easily burn up a year pushing that noodle up the hill.
Net, net: Yes, it could be a good time, if you have enough time to kiss a lot of frogs and ample capital to fund due dilly and cover operating losses for 12-24 months, while you improve operations and wait out the economic malaise.
This is a GREAT buying period for astute investors with CASH money! In today's ever changing market, prudent buyers can buy high-end golf courses for less than .60 on the dollar.
Why catch a falling knife? When commercial real estate comes back and businesses start increasing office space to hire more people then people will have more discretionary income. Until then it is very hard to determine if we are at a bottom. Buyer beware...
We are actively in the market evaluating distressed residential communities with golf. These properties have substantial infrastructure in place that can be bought well below replacement cost from their lender owners. We believe it is an excellent time to buy, but as has been previously pointed out, these deals are extremely risky, may depreciate further before moving upward, and require substantial cash to cushion the recovery. There is no question a bid - ask gap exists for many deals, but as time goes on, the lenders will need to move the properties.
Add new comment