Seeing Green on The Fairways

Amid a glut, investors buy golf courses on the cheap | “They built too many courses during the Tiger boom”

Christine Harvey

“Golf will be a really good business,” says Trump, who’s buying the Doral Golf Resort & Spa for $150m


Looking for real estate bargains? Consider golf courses. Investors from Donald Trump to luxury homebuilder Toll Brothers are wagering there’s money to be made buying them. Standalone 18-hole golf properties in the U.S. sold for a median price of $3 million in the first nine months of last year, down from $4.5 million in 2006, according to data from broker Marcus & Millichap Real Estate Investment Services. Prices slumped after lenders including the finance arm of General Electric stopped providing money for building courses and investors in commercial mortgage-backed securities retreated amid losses on deals made at the height of the property bubble. “Lack of financing is really causing a discount to value, and investors are taking advantage,” says Steven Ekovich of Marcus & Millichap. “Golf courses may never be as cheap as they are today.”

The sport’s popularity soared after Tiger Woods won the 1997 Masters Tournament at Georgia’s Augusta National Golf Club. In 2000, when Woods captured the U.S. Open in Pebble Beach, Calif., by a record 15 strokes, an unprecedented 400 courses were opened. Television ratings typically surge by as much as 50 percent when Woods is in contention to win a tournament, according to Nielsen figures. He hasn’t won a regular season PGA Tour event since September 2009, a span during which his career has been derailed by his admission to extra marital affairs and assorted injuries.

Woods’s fortunes aside, golf took a blow when the recession hit. The total number of rounds played in the U.S. annually has fallen more than 7 percent since 2006, according to research firm Golf Datatech. As a result, about 775 golf courses have closed. While new ones continue to open, the nationwide course count has declined by 355 since 2006, to about 16,000, according to the National Golf Foundation. Terry Vanek, an analyst at Marcus & Millichap, estimates that there are about 185 standalone golf courses on the market today — with asking prices of $320,000 to $15 million.

Toll Brothers, the largest U.S. luxury homebuilder, is buying private golf clubs until the residential real estate market improves, according to David Richey, president of Toll Golf, a division of the company. Toll plans to buy three golf properties in cash at “distressed prices” of $3 million to $4 million by the end of this year, Richey says.

Peter Nanula, former chief executive officer of Arnold Palmer Golf Management, started Concert Golf Partners in 2010. He has as much as $50 million to buy golf properties that he intends to revamp and sell within five to seven years. Concert Golf made its first course purchase in July, when it bought Heathrow Country Club’s golf course and racquet club for $4.5 million. The club, in north Orlando, sold for $20 million in 1996, the Orlando Sentinel reported, citing Seminole County court records.

Trump is buying the Doral Golf Resort & Spa in Miami out of bankruptcy for $150 million five years after Morgan Stanley acquired it as part of the $6.7 billion purchase of CNL Hotels & Resorts. The resort features five courses on 800 acres, including the famed Blue Monster, and about 700 hotel rooms. “They built too many courses during the Tiger boom, and now they’re closing and disappearing,” says Trump. “At some point enough will disappear that golf will be a really good business.”

The bottom line With financing scarce, the median price for a golf course was $3 million in the first nine months of 2011, down 33 percent from 2006.


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