Golf in and After the Pandemic
June 24, 2021
In March of 2020, the United States shut down as it was hit with the Covid-19 Pandemic. Businesses across the country closed their doors as the country entered a lock down. By May it was determined that golf courses were a safe activity and courses were allowed to re-open. Food and Beverage operations were still closed or limited and there were few if any banquets, weddings and outings. With so few other options, activity at golf courses exploded as golfers old and new swarmed to get on a course and enjoy some time away from lockdown. The frenzy in active continued all summer and into the fall and winter of 2020/2021. Golf course owners reported record rounds and increased profits despite the lack of F&B.
Not only did golf courses do well, but every sector of the industry saw increased activity. Private clubs have seen an increase in membership and initiation fees, daily fee courses saw increase in greens fee and rounds. Equipment manufacturers saw their biggest jump in business in over a decade. Golf was/is hot and for the first time since the early 2000’s the industry was seeing positive press.
What does that mean for valuations of golf courses? Increased profits and EBITDA should lead to increases in sales prices. We are not seeing much if any change in how investors value golf courses, the long held metric of 6-8 times EBITDA still seems to hold true today. While there does appear to be more interest in golf course acquisitions and an uptick in new investors in the golf course industry, there is still no national debt source willing to focus on golf. Every sale looking for debt needs to source it on their own from local lenders or personal contacts as there has not been a national lender since Textron left the market in 2007.
The largest golf course investors, ClubCorp, Arcis and Concert Capital have all been relatively quiet in 2020 and so far in 2021. There just aren’t enough good deals in the market for them to deploy capital at this time. The most active buyer has been Heirtage Golf Group. They have been actively buying lifestyle clubs looking to increase their portfolio. Troon Golf has continued buying up their competitors which has further separated them from the rest of the management companies. Kemper Sports continues to distinguish themselves with high end luxury properties like Sand Valley and Bandon Dunes.
Golf courses are still, and maybe more so, highly sought after by residential and now industrial developers. The large blocks of land, 150 acres +, that golf courses take up make them very attractive redevelopment options especially given the state of the residential and industrial markets. For every 10 calls we receive on a golf course listing 7-8 are from developers looking to redevelop the course into an alternate use.
So where are things going from here. We believe that Acquistions will be slow the remainder of the summer until after Labor Day. Come October we believe that many owners will seek to capitalize on their 2020/2201 results and cash out of their investment. A resurgence of sales activity is on the horizon for the fall of 2021going into 2022.
Links Capital Advisors is also working with buyers for Cell Tower leases and Billboards. If you have one on your property we can arrange a sale. Prices are quite attractive and the buyers move quickly.
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