Genesis Scottish Open

The Renaissance Club

A Pro's Perspective

February 16, 2009

Hilda Allen

Feeling blue about the future of golf clubs and real estate? Well, cheer up! "Great opportunities" abound for investors, argues Hilda Allen.

Allen, owner of Hilda W. Allen Real Estate, is the first to admit she views the world through rose-colored glasses. But her look-at-the-bright-side attitude has taken her far. Her Adel, Ga.-based firm leads the way in a small but highly specialized field: brokering the sale of golf courses. She's been at it for 31 years, having closed on more than 400 golf course sales since 1991.

Her 2008 deals include the Florida Club in Stuart, Fla.; Woodlake Golf Club and Providence Club in Monroe, Ga.; the Majors Golf Club in Palm Bay, Fla; and the Bellaire Golf Club in Bellaire, Mich.

Allen recently sat for a Q&A with Deeds & Weeds.

Q: What advice do you have for people looking for a golf home?

A: Pick a golf course that's got a healthy owner and a healthy development. They're out there! The sun belt now is full of great opportunities if you've got the money. Some amazing places are selling at 30 to 50 cents on the dollar.

How do you find them?

You have to do your due diligence. Hire a good broker and really research it. Look at the history of the place, at its track record, how do people keep up their places. Twelve months ago, what were homes selling for? How many have sold since then?

I'm assuming prices will have declined over the past 12 months, no matter where you look.

No, there are areas where prices have not gone down. I just left one in Georgia. Even foreclosure sales were not bringing the price down. There are pockets like that all over the country. There's just not that much turnover in these places. They're solid.

Where else?

The Greenville-Spartanburg, S.C., area is holding up well. That area hasn't been hurt as bad as some. Golf courses are doing pretty well there. Tampa, Fla., hasn't been hit that hard. Some pockets of metro Orlando. Sarasota, in places.

The Midwest was hit pretty hard seven to 10 years ago, losing a lot of value in some of those markets. This time around, they're not taking it as hard as some. There are several suburbs around Chicago like that, south of Chicago. Kansas City even. Independence, Mo. Nashville, Tenn., has slowed down but not stopped.

I just came back from New Orleans and drove through that area and parts of Mississippi. There are some depressed areas, yes, but there is still a lot of development happening. Birmingham, Ala., doesn't seem too bad.

There are areas in Atlanta that are solid still. Marietta, Alpharetta. Some builders overbuilt but some properties are doing really well. Private clubs are doing well. People are still playing golf. They've cut back on some areas but they're still playing. Sure, there are clubs that have lost members. But they're solid.

Whitney Crouse recently bought Crooked Creek and Alpharetta Country Club north of Atlanta and is instituting new membership policies and doing a great job. He's managing it like it should be: steady, back to basics.

Oklahoma City is doing ok, if they're all right after those storms that hit the other day.

Houston is a great market. Houston is doing very well.

Everybody needs to work on managing their resources – managing what they have. Give customers what they want for the money and they'll support you.

I just sold a course in Brooksville, Fla. It's called Sherman Hills. Now my customer has two courses. He is Jerry Marcum, and he's got them running well.

What's selling?

Owner-financed properties.

What's not?

Bank-owned properties. You know that expression when someone has had too much to drink -- they were "overserved"? The banks were overserved. They were lending too much money to people who didn't know what they were doing. Banks needs to get back to the old, simple rules of covering your debt ratio and good balance sheets.

Have you ever seen anything like this?

Yes. I've been at this 31 years, so I was around in the RTC (Resolution Trust Co.) days, Jimmy Carter with double-digit interest rates, so yeah ... But I'm not sure I've ever seen such a widespread problem as this: It's not just housing, retail, commercial ... Everybody had such a false sense of value.

It's a correction period, and money's got to start flowing again.

When is that going to happen?

When we stop bailing out failed banks and start working toward having a sense of values and morals -- and we get away from this "gimme generation."

How long will that take?

It's not going to take too long.

We've got to tighten our belts and create some new synergies and try to take advantage of the opportunities before us.

A lot of communities are looking at taking over management of their clubs. What advice would you offer them?

Those communities need to find third parties who know how to run these businesses. Golf is a business. And it's a business with a lot of moving parts. It's part farm business, in a way; part restaurant, part customer service....There are so many businesses intertwined. They need to hire someone with expertise in all these areas. I can recommend a list of them. They can contact me.

What advice would you offer someone who's thinking about buying a course?

Make sure you've got your debt and equity lined up. And you've got to look at this as a long-term deal. If you're looking to double your money and exit in three to five years, it's not going to happen. You need to look at seven to 10 years to turn these things around.

-- P.F.