Concert Golf Partners in Newport Beach is on the verge of closing a $90 million fund in order to add to its portfolio of country club golf courses.
The private equity firm already has allocated about $14.5 million of the FC Golf Partners 2 fund to acquire a golf club in the southeastern U.S., as well as one in the northeast. Each of the deals are expected to close in the next few months.
“We needed the capital to do these deals,” said Managing Partner Peter Nanula, who mapped out a strategy four years ago to acquire private golf courses with challenging debt loads or money-losing operations.
The attorney-turned-financier has grown Concert Golf’s portfolio to eight courses in Arizona, Indiana, Oklahoma, Washington, D.C., and Florida, where the bulk of the company’s 1,000 employees work in an Orlando office.
Adding Value
The aim is to add value to the golf clubs with an emphasis on the basics.
“We buy them, capitalize them, fix them up and make them much nicer than country clubs,” said Nanula, who honed his game on the greens as the founding chief executive of Addison, Texas-based Arnold Palmer Golf Management.
He grew the company’s portfolio to roughly 30 golf clubs—including Strawberry Farms in Irvine—that brought in more than $100 million in annual revenue and 2,000 employees. The operations were sold off in several transactions at undisclosed prices in 2000 and 2001.
Industry sources pegged the total price of the deals at more than $200 million.
Concert Golf typically acquires courses with price tags in the $4 million-to-$10 million range, about on par with the annual revenue they generate. Assets are typically held five to 10 years, although one course has drawn genuine interest from potential buyers, prompting the firm to hire CBRE’s Golf & Resort Group to explore a likely sale in the coming months, according to Nanula.
Investors
Concert Golf’s inaugural $50 million fund drew investments from a number of local family offices that didn’t hesitate teeing up for a second round.
“Virtually all of them reinvested,” Nanula said. “Investors have been pleased with the consistent yields they’ve been getting.”
Indeed, the niche segment of the golfing industry is holding its own compared to public courses, which have seen declines in the number of players and rounds played the past several years.
Dallas-based country club owner and operator ClubCorp Holdings Inc., which raised nearly $169 million in a 2013 initial public offering, has seen its share price increase 6.5% in the past year to a market value of about $1.2 billion.
The company’s golf and country club business jumped 10.6% to $695 million in its first full year on the New York Stock Exchange, helped along by hikes in annual revenue from greens fees, as well as from food and beverage and golf operations.
The private and public golf segments still face long-term challenges in replacing an aging, primarily white demographic with younger golf enthusiasts.
The country club segment remains stable, however, and still generates about $25 billion in related sales annually.
