Distressed Golf Course Supply Nearly Gone/ Prices To Trend Up
While price levels are not back to 2006, the bottom of the market in golf courses is behind us, at least in the
Good news for owners who would like a sale:
Most of the bank-owned properties have been
purchased. That means, in the future, golf course owners with
break-even or better operations should be able to achieve better prices for
properties than in recent years. There are still a few
distressed sales, but certainly not many.
Good news for buyers:
As quality courses return to the market, it will be easier
to locate financing. Properties will be more turn-key, less total
turn-around.
Pricing:
In the last 12 months, courses have sold for an average of 1.5 times
revenue, according to the Society of Golf Course Appraisers. In good
times, the range was 2-2.4 times revenue or 10 times NOI. Look for the
average sale prices to start trending upward. Cash buyers still get the lowest
purchase prices, and those with owner financing typically achieve higher sale prices.
What buyers look for:
Buyers still look at financials, particularly revenue
and NOI, as a gauge of course performance. Ask your CPA how your
course can look its best on paper.
Tip: 1.) Do not put your
Debt Service/ Mortgage Payments or Depreciation in
expenses. It doesn't belong in a calculation of NOI. 2.) Make sure income and expense categories are typical for golf.
-- Kathy Bissell
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