Tuesday, January 14, 2014

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 US

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.


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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