Last Update :5/18/2016
Market Survey, Is Any Club Bulletproof?, Conservation Easements and More
STATE OF THE MARKET
It's always interesting to review market indicators. In the golf course industry, we measure performance by cap rates, discount rates and Gross Revenue Multipliers. As shown in the adjacent and below graphs, courtesy of the Society of Golf Appraisers (SGA) 2016 market survey, the value of golf properties has improved slightly since 2009. Cap rates have improved from around 12% at the height of the recession to approximately 10.5% on average now, with discount rates making only slight improvement. Conversely, mortgage interest rates, according to the SGA study have remained between 7% and 8% since a high in excess of 8% in 2009.
Gross Revenue Multiples, how many buyers evaluate golf properties today, on average have remained steady around the 1.5 mark, however the range has varied from around .5 to in excess of 4.0. It should be noted that these multiples are quite sensitive to a propety's net income levels and many buyers still seek propeties in the 1-1.25 range.
We often read surveys from some that values of golf courses are rising rapidly. In some cases, where a property's financial performance has improved, it's value and potential sale price will react accordingly, however the risk level perceived in golf course properties appears to be steady with slight improvement.
For a copy of the complete survey, click below to email me and I'll send to you.
IS ANY CLUB BULLETPROOF?
In recent times many clubs have increased membership, implemented improvement plans and generally feel better about themselves than a few years ago. Accordingly, some clubs are stabilizing membership and moving forward confidently.
Somewhat surprisingly, many clubs have steered away from the more member-friendly policies that helped them dig out of the hole. Check out my latest contribution to Board Room Magazine to learn more, and remember to "like" us on Facebook by clicking below.
THE TAX CORNER
It seems as thought there's never a shortage of tax issues related to golf properties. On the real estate tax front, courts in many states struggle to rule fairly on how properly to assess golf properties, as sh
own in this recent article posted on Golf Dispute Resolutions, which highlights 3 cases in New Jersey and New York. Many golf and club properties are contesting asssessments and understanding how they need to be valued and how courts view the process is essential.
On the income tax front, it's no secret that the Internal Revenue Service (IRS) doesn't like conservation easments on golf course properties. This is highlighted in the cases addressed in linked articles below that demonstrate how difficult it's becoming to place a conservation easement on a golf property.
THE GPA PRACTICE TEE
GPA has recently been retained for the follwoing assignments:
- (VA) - Appraisal of private club for use in ad-valorem tax assessment appeal
- (FL) - Appraisal of excess land for private club
- (PA) - Appraisal of Private Club for mortgage financing
- (NJ) - Litigation support for private club in membership refund dispute
(FL) - Appraisal of multi-course resort for ad-valorem tax assessment appeal
[ More News ]