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Creative Financing Techniques in the Golf Industry

NGCOA Multi-Course Owner’s Retreat. Creative Financing Techniques in the Golf Industry. Moderator: Van Tengberg – Foley & Lardner LLP. June 20, 2007.

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Creative Financing Techniques in the Golf Industry

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  1. NGCOA Multi-Course Owner’s Retreat Creative Financing Techniques in the Golf Industry Moderator:Van Tengberg – Foley & Lardner LLP June 20, 2007 Panelists:James Mendelson – GE CapitalGerry Hinckley – Textron FinancialBruce Lowrey – CapMarkDon Rhodes – CNLMark Elliott – Hodges, Ward & Elliott

  2. Golf Industry Loans • What type of golf industry loans have you seen/structured in your career? • Asset based • Cash flow based • Amortization periods • Fixed vs. variable • Interest rate indexes • Participating loans • Cash flow • Sales proceeds • Other?

  3. CMBS • We hear a lot of CMBS – What is CMBS and have any of you sold your loan portfolios in such a transaction? • Describe CMBS • Pros • Interest rate • Cons • Requirements • Restrictions • Loan modifications • Expense • Yield maintenance and defeasance

  4. Interest Rate Swaps/Hedges • What are they? • Costs? • How do they benefit/burden the borrower?

  5. Mezzanine debt • Mezzanine debt is used extensively in the corporate and commercial real estate world – What is it and does it have a place in the golf industry? • How is mezzanine debt structured? Who is the borrower? • Terms – interest rate, amortization? • Security • Guaranties? • Cross-collateralized? • Can mezzanine debt be used to leverage other acquisitions?

  6. REIT’s in Golf • Typical structure • Due diligence costs, underwriting costs • Purchase price, tax benefits • Senior mortgage debt • Master lease • Term • Rent calculation • Percentage rent • Cap X • FF&E • Credit support • Option to purchase

  7. Private Equity • Private equity is clamoring to be involved in commercial real estate deals. Has private equity made any inroads in golf? When will the wave hit? • Institutional private equity vs. retail private equity • Typical private equity deals in real estate • $ range of investments/single vs. portfolio acquisition • Coupon rate • IRR hurdles • Promote to sponsor • Governance • What is preventing private equity from stampeding the golf industry?

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