Transcript North Carolina Department of Revenue

North Carolina Department
of Revenue
ADVANCED PERSONAL
PROPERTY SEMINAR
Joseph S. Koury Convention Center
Sheraton Greensboro Hotel at Four Seasons Mall
Greensboro, North Carolina
September 15, 2011
2:30 pm – 3:20 pm
Trends in Golf Course Valuation
Andy Hinds, MAI, SGA® *
Hotel and Club Associates, Inc.
[email protected]
336-379-1400
* Member of the Appraisal Institute, Society of Golf Appraisers
I. Cost Approach
Example of External Obsolescence
Year of
Golf Course Building
Location
ConCost
Cost
struction
Misc. (grow
in, start up,
Total Golf Total Golf
Subtotal
marketing, F.F.&E.
Course Course Cost
Golf Course Land Value
carry cost,
Cost
Cost Plus
Without
Cost
contingency,
Land Value Land Value
etc.)
Sale
Price
Golf Sale
Externl
Price
Date of
ObsoWithout
Sale
lescence
Land Value
Virginia
1999
$8,619,000 $3,011,705
$3,145,000
$90,820
$14,866,525
$778,000
$15,644,525 $14,866,525 $5,318,000 $4,540,000 Dec-06
69%
North
Carolina
1997
$3,808,350 $3,058,499
$1,232,250
$704,961
$8,804,061
$1,650,000 $10,454,061 $8,804,061 $3,036,000 $1,386,000 Aug-03
84%
South
Carolina
1993
$4,100,000 $2,691,542
$900,000
$220,000
$7,911,542
$1,519,680
$9,431,222
$7,911,542 $2,500,000
$980,320
Sep-05
88%
North
Carolina
1998
$3,002,000 $1,663,716
$722,000
NA
$5,387,716
$2,300,000
$7,687,716
$5,387,716 $2,750,000
$450,000
Nov-03
92%
Sale
Price
Golf Sale
Externl
Price
Date of
ObsoWithout
Sale
lescence
Land Value
$4,700,000 $2,150,000 Sep-05
60%
II. Income Approach
1. Uniform System of Financial Reporting
for Clubs
1
An example of the Uniform System of Financial
Reporting for Clubs for a hypothetical public golf
facility is shown next.
1.
Uniform System of Financial Reporting for Clubs, Sixth Revised edition Club Managers Association of America, Inc. www.cmaa.org
Hypothetical Example of Application of the
Uniform System on a Public Golf Facility
$
% of
$ Per
Amount
Total
Round
REVENUES:
Public Greens Fees & Annual Fees
$600,000
50.0%
$20.00
Golf Cart Fees
$240,000
20.0%
$8.00
$30,000
2.5%
$1.00
Food & Beverage Sales
$180,000
15.0%
$6.00
Pro Shop Sales
$120,000
10.0%
$4.00
$30,000
2.5%
$1.00
$1,200,000 100.0%
$40.00
Range Fees
Other
Total Revenue:
DEPARTMENTAL COSTS & EXPENSES:
Golf Course Maintenance
$300,000
50.0%
$10.00
Golf Carts
$60,000
25.0%
$2.00
Range
$20,000
66.7%
$0.67
Food & Beverage Costs & Expenses
$144,000
80.0%
$4.80
Pro Shop Costs & Expenses
$150,000 125.0%
$5.00
Other
Total Departmental Costs & Expenses:
$26,000
86.7%
$0.87
$700,000
58.3%
$23.33
UNDISTRIBUTED EXPENSES:
Administrative & General
$120,000
10.0%
$4.00
Management Fees
$40,000
3.3%
$1.33
Marketing & Entertainment
$20,000
1.7%
$0.67
$6,000
0.5%
$0.20
Utilities
$30,000
2.5%
$1.00
Clubhouse Repairs & Maintenance
$20,000
1.7%
$0.67
Total Undistributed Expenses:
$236,000
19.7%
$7.87
REVENUE BEFORE FIXED CHARGES:
$264,000
22.0%
$8.80
Professional Fees
FIXED CHARGES:
Real & Personal Property Taxes
$30,000
2.5%
$1.00
Property Insurance
$18,000
1.5%
$0.60
Reserves for Replacement
$24,000
2.0%
$0.80
Total Fixed Charges:
$72,000
6.0%
$2.40
TOTAL COSTS & EXPENSES:
$1,008,000
84.0%
$33.60
NET OPERATING REVENUE:
$192,000
16.0%
$6.40
Recap of Uniform System Example
$
Amount
% of
Total
$600,000
$240,000
$30,000
$180,000
$120,000
$30,000
$1,200,000
50.0%
20.0%
2.5%
15.0%
10.0%
2.5%
100.0%
$20.00
$8.00
$1.00
$6.00
$4.00
$1.00
$40.00
DEPARTMENTAL COSTS & EXPENSES:
Golf Course Maintenance
Golf Carts
Range
Food & Beverage
Pro Shop
Other
Total Departmental Costs & Expenses:
$300,000
$60,000
$20,000
$144,000
$150,000
$26,000
$700,000
50.0%
25.0%
66.7%
80.0%
125.0%
86.7%
58.3%
$10.00
$2.00
$0.67
$4.80
$5.00
$0.87
$23.33
UNDISTRIBUTED EXPENSES:
Administrative & General
Management Fees
Marketing & Entertainment
Professional Fees
Utilities
Clubhouse Repairs & Maintenance
Total Undistributed Expenses:
$120,000
$40,000
$20,000
$6,000
$30,000
$20,000
$236,000
10.0%
3.3%
1.7%
0.5%
2.5%
1.7%
19.7%
$4.00
$1.33
$0.67
$0.20
$1.00
$0.67
$7.87
REVENUE BEFORE FIXED CHARGES:
$264,000
22.0%
$8.80
FIXED CHARGES:
Real & Personal Property Taxes
Property Insurance
Reserves for Replacement
Total Fixed Charges:
$30,000
$18,000
$24,000
$72,000
2.5%
1.5%
2.0%
6.0%
$1.00
$0.60
$0.80
$2.40
TOTAL COSTS & EXPENSES:
$1,008,000
84.0%
$33.60
NET OPERATING REVENUE:
$192,000
16.0%
$6.40
REVENUES:
Public Greens Fees & Annual Fees
Golf Cart Fees
Range Fees
Food & Beverage
Pro Shop
Other
Total Revenue:
$ Per
Round
2. Capitalization
Sources of overall golf capitalization rates:
 Actual Golf Sales from:
buyers & sellers, brokers, appraisers
 Society of Golf Appraisers www.golfappraisers.org
 Realty Rates www.realtyrates.com
III. Sales Comparison Approach
1. Sources of Data
a) Public Records
b) Articles
c) Appraisers and Brokers

CB Richard Ellis www.cbre.com

Hilda Allen www.hilda-allen.com

Marcus & Millichap www.marcusmillichap.com

Hodges Ward Elliott www.hwehotels.com

Coldwell Banker Commercial www.kbgolfcoursesales.com
d) Golf Pros, Managers and Owners
e) Publications

Golf Inc. www.golfincmagazine.com

Golf Business Magazine www.golfbusiness.com
2.
Units of Comparison
a) GRM – Gross Revenue Multiplier or
NIM – Net Income Multiplier
b) Price per Hole
c) Price Per Round, Price Per Acre or Price Per Member
GOLF SALE
NAME:
LOCATION:
DATE OF SALE:
GRANTOR:
GRANTEE:
DEED BOOK / PAGE:
DESCRIPTION
Type of Facility:
Acres:
Holes:
Yards:
Golf Course:
Clubhouse:
Other Buildings:
Amenities:
Equipment:
Golf Carts:
Sample Golf Course
Anytown, NC
January 1, 2011
Sample Golf, Inc.
Sample Golf, LLC
2000 / 100
Semi-Private
150
18
7,000
The course opened in 1990 and was designed by Andy Hinds.
It features a mixture of flat terrain with rolling hills and
wooded areas. Fairways are generous, just a few are treelined. Greens are medium in size with undulations. Four tee
boxes per hole. Water hazards come into play on nine holes.
3,000 SF, one-story building constructed in 2000
6,000 SF metal golf maintenance building built in 2000 and
4,000 SF metal golf cart storage building built in 2000
Putting green, chipping area, restaurant, full bar
All golf maintenance equipment included
72 leased electric carts included
SALES PRICE:
Terms:
Price Per Acre:
Price Per Hole:
Price Per Yard:
Price Per Round:
$1,920,000
Cash to Seller
$8,000
$66,667
$171
$40
ECONOMIC INDICATORS
Gross Income:
Operating Expenses:
Net Operating Income:
Gross Income Multiplier (GIM):
Overall Cap Rate (OAR):
Actual (show either Actual or Buyer’s Pro Forma or both)
$1,200,000
$1,008,000 (84.0%)
$192,000
1.60
10.0%
OPERATING DATA
Rounds of Golf:
30,000
COMMENTS:
The course was owned by a local family and acquired by a
regional golf management company. The market period was
about 12 months.