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Interested in becoming a Topgolf landlord? Here's how the deals work for locations in Baltimore and Kansas

November 22, 2023

Michael Baxter, Baxter Imaging LLC

The "off-course" part of the golf business—think Topgolf, Popstroke and the like—is exploding, and that's not even a joke at the expense of the TGL and its season-cancelling dome deflation. Topgolf is a billion-dollar business, and its revenue has increased by more than 15 percent so far this year.

It's officially too late to get in on the ground floor as an early-stage Topgolf investor, but you can participate in that revenue growth if you have a big enough wallet. Topgolf Callaway Brands' rollout strategy is similar to that of other chains growing with company-owned locations instead of franchises: Focus on running the business and leave the land in the hands of a hands-off landlord. What does that look like in real life? A brand new Topgolf location sits on prime real estate near downtown Baltimore and the Ravens' M&T Bank Stadium. Topgolf has a 20-year lease in place with 10 percent rent increases cooked in every five years. The original developer is selling the land and that corporate-guaranteed lease for $59 million.

Ownership has its privileges but not exactly the ones you might expect. You would strictly be the name on the deed: Day-to-day operations are handled by Topgolf, and the absolute triple-net lease means the tenant (Topgolf) pays all taxes, maintenance and other expenses. That means no showing up at all hours to hit balls from your special "owner's suite" or deciding to change the turf color to Ravens black and purple on a whim. As a newly-minted land baron, you'll lock in a six-percent annual return on your investment (plus assorted tax benefits), and the comfort of picking up what experienced real estate investors call WUM—wake-up money that appears whether or not you decide to change out of sweatpants in the morning.

If that buy-in is too steep, a virtually identical Topgolf build-out that went up at the same time in Wichita is also for sale. That one has the 20-year lease, built-in rent increases and zero landlord responsibilities, but can be yours for just $21 million.